The Germany government has warned that gas prices in the country are likely to soar and remain high until at least 2027.
Bloomberg reported on Wednesday that based on the latest report by Germany’s Economy Ministry, the gas prices may surge to around €50 (US$54.62) per megawatt-hour ahead of the heating season.
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The price projection the report went further to state was based on the forward prices at the end of June, and the prices are expected to remain high for the next four years, unless additional emergency measures are taken.
The German gas storage operators group INES earlier this month warned that Germany will remain in danger of gas shortages during the heating seasons through the winter of 2026-27, unless it adds more fuel infrastructure, including additional liquefied natural gas (LNG) terminals, storage capacity, and pipeline connections.
Germany relied on Russia for roughly 40% of its gas prior to 2022, and was among the hardest hit by the reduction in Russian energy deliveries last year, which were either significantly curtailed or entirely halted after the EU imposed sanctions on Moscow in response to the conflict in Ukraine.
To ease the impact of the reductions on customers, the German government paid €22.7 billion in power and gas subsidies since last year, including a one-off payment in December, the ministry said.
Despite measures taken by Berlin to replace Russian gas with alternate supplies and efforts made to lower energy consumption, experts have warned of the lingering threat of shortages ahead of the heating season, and a surge in prices.
EU benchmark gas futures for September delivery at the TTF hub in the Netherlands were trading at around €38.6 per megawatt-hour in household terms at around 08:00 GMT on Thursday, after surging to nearly €47.6 earlier this week. The price is roughly twice as high currently as its average between 2008 and 2021 (around €19.40).
European gas price had jumped by 40% in the preceding week as the potential for disrupted lobal liquefied natural gas supply from Australia spooked traders betting on further price declines.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
