Germany: Tension in the Middle East poses a threat to gas supplies

The head of the German energy company E.ON said that the gas supply situation in Germany is much better than it was after Russia cut supplies last winter, but tension in the Middle East region may lead to higher energy prices.

Since the sudden collapse of a decades-old relationship in the energy sector between Germany and Russia against the backdrop of the Russian war in Ukraine in February 2022, Germany has been scrambling to obtain supplies, and the energy crisis has slowed Europe’s largest economy, pushing it into a recession last year.

“It would take a lot for a gas shortage to occur this winter,” E.ON’s CEO Leonhard Birnbaum told the Rheinische Post newspaper in an interview published on Tuesday, noting that storage facilities are full and purchases from China, the largest buyer of liquefied gas, are currently shrinking.

He noted that since much of the liquefied natural gas that Germany now depends on comes from the Gulf region, instability there will have an impact.

Birnbaum added, “If the situation worsens, it will have an impact on all energy markets… They are more complex than before, not only oil prices, but also gas and electricity prices… The Gulf is the main route for oil and liquefied natural gas”.

The Houthi group in Yemen intensified its attacks on ships in the Red Sea to show its support for Hamas, which is fighting Israel in Gaza.

The attacks prompted some shipping companies to change the routes of their ships.

E.ON, the largest energy network operator in Europe, said last March that it would increase its investment program until 2027 by 6 billion Euros, to 33 billion Euros ($34.9 billion).

Of the total, 26 billion Euros would be allocated to expanding and reforming energy networks to integrate renewable energy assets and digitalize operations, it said at the time.