Gas storage levy hike hits eastbound German exports

Germany's gas exports to Austria and the Czech Republic have dropped in July, eroded by an increase in the German storage levy and lower demand.

Flows to the Czech Republic from Germany at the Brandov interconnection point were just under 189 GWh/d on 1-10 July, while Waidhaus deliveries were zero. This was down from combined flows through Brandov and Waidhaus of 321 GWh/d in June, leaving German exports to the Czech Republic on track to be their lowest for any month since at least the end of 2022.

Exports to Austria are also on course to be their lowest this year — they averaged 65 GWh/d on 1-10 July, down from 140 GWh/d in June.

And flows to Poland through Mallnow have been minimal, at just over 1.6 GWh/d, down from 7 GWh/d in June (see graph).

The increase in the German gas storage levy on 1 July — to €1.45/MWh from €0.59/MWh — raised concerns about Germany's transit role, with some market participants in central and eastern Europe eyeing alternative import routes.

Firms including Austria's OMV and Slovakia's SPP — which receive Norwegian supply, probably through Germany — expressed concerns to Argus about the raised levy, saying it would drive up transport costs.

But flows to Austria from Italy — which can receive French gas through Switzerland — have stepped up this month. They were at 6.9mn m³/d on 1-9 July, up from 4.1mn m³/d in June.

The Federation of Austrian Industries and Austrian balance group co-ordinator A&B have each already filed a complaint against the German storage levy with the European Commission, with A&B saying the levy is a kind of customs duty and therefore violates EU law.

Firms prepared for levy hike

Weak injection demand could limit central and eastern European firms' import needs in the third quarter. Firms had an incentive to front-load imports — and therefore injections — in the first half of summer to cushion the impact of the increased levy.

High stocks in Austria, the Czech Republic and Slovakia mean there is limited third-quarter injection demand, so imports from Germany could remain weak for the remainder of this quarter.

Austrian underground stocks were at 84.2pc of working capacity on the morning of 10 July, while Czech and Slovak sites were 87pc and 85.7pc full, respectively.

That said, the stockbuild at Austrian sites is little changed on the month, at 217 GWh/d.

In contrast to the Czech Republic, which is heavily dependent on Germany for imports, Austria and Slovakia can ramp up their Russian take through the Ukrainian route. And Austrian firms could also call more on Italian imports at the Tarvisio point.

By Florence Schmit and Eleni Charisi

German net gas exports GWh/d