The European natural gas market faces supply shortages, with subsidy negotiations in Germany becoming a focal point.

Notice that the natural gas market manager in Germany mentioned that, with Europe on the brink of another supply crunch, they are "closely discussing" the potential subsidy issue of supplementing storage facilities with authorities. Trading Hub Europe GmbH (THE), responsible for the smooth operation of the natural gas market in Germany, announced last month considerations for subsidies from suppliers, sparking strong interest among traders. However, as speculation about the design of the plan led to significant price fluctuations, the company remained tight-lipped about the details of the plan. "There has been no decision made yet," said THE Managing Director Thorsten Frank in an interview in Essen. "We are still negotiating with the department and regulatory authorities, and once finalized, we can have a deeper discussion on when to introduce this tool." The purpose of this tool is to help the country build a fuel buffer for next winter in adverse market conditions. Normally, traders would stockpile natural gas in warmer months with lower demand and prices. However, recently, the fuel to be delivered this summer has become more expensive compared to winter contracts for next year, making stockpiling natural gas less cost-effective. The price of European summer natural gas has been increasing. Earlier reports have shown that the price of purchasing natural gas for the summer of 2025 is higher than buying for next winter. Since losing most of the Russian pipeline fuel delivery in Europe in 2022, maintaining a large fuel inventory is crucial for Europe's energy security as it can alleviate the surge in demand during the heating season. In order to incentivize stock replenishment and meet regulatory targets, THE is discussing providing subsidies to suppliers when the seasonal price spread is not favorable. The announcement of negotiations in January led to a further widening of the spread, indicating that despite the price increase, they would still purchase summer natural gas. "This is not only because of the announcement from THE, there are many different factors affecting the spread," Frank said. "The spread had already started before this." He added that the product may still not be launched. Frank stated that the main message for energy market participants gathered in Essen this week is "there will be no direct announcement of when this product will be launched." "In the end, the tool will provide financial support for the construction and participation of all parties involved in the project," he said. "The focus is that natural gas must be in storage by November 1st. Gas that doesn't meet the requirement will not be allowed."