Germany Accused of Hoarding Gas Meant for Czech Republic

(Bloomberg) -- The Czech Republic accused Germany of hoarding gas by slashing the capacity of an export pipeline just as the region grapples with replacing supplies from Russia.

Czech energy minister Jozef Sikela said transmission system operator Gascade Gastransport GmbH reduced the exit capacity of a connection point at his country’s northwest border, according to a letter seen by Bloomberg News.

The amount will be cut to 14.5 gigawatt hours as of Oct. 1, compared with the current capacity of 69 gigawatt hours, he told the European Union’s energy commissioner, Kadri Simson. A similar letter was sent to German economy minister Robert Habeck.

Gas supplies flowing from west to east will be crucial as the EU tries to further reduce its reliance on fossil fuels from Moscow. Germany was among the hardest hit by the energy crisis and depended on increased imports of liquefied natural gas and power from its neighbors.

The company’s decision to reduce capacity could throw the continent’s spirit of cooperation into disarray and make it harder for eastern European nations to cut their dependence on Russia.

“This situation creates an incentive for some member states to maximize their gas imports from the east,” Sikela wrote. “In extreme cases, such a low capacity would be barely enough for the Czech gas market, but in no case could it significantly contribute to the supply of other countries.”

The adjustments at the VIP Brandov connection reflect the fact there are lower overall gas volumes in the German system because of the elimination of Russian imports, a Gascade spokesperson said. The Czech Republic could still book some of the connection’s unused capacity in the short term, he said.

Germany’s economy ministry said that bilateral talks to guarantee supply security in winter are already being held at European level. A spokesperson also pointed out that “there are various options for booking gas capacities,” in particular “at the German LNG terminals”.

Central Europe will be relying more on pipeline gas flows from the northwest after a transit deal to move Russian gas via Ukraine expires in January, according to Goldman Sachs Group Inc.

At the same time, such flows from Germany have declined since last summer as more nations rely on LNG instead, Samantha Dart, head of natural gas research, wrote in a note this week.

The Czechs have accused Germany of penalizing its customers before by increasing a gas storage levy to €2.50 per megawatt-hour from €1.86. The country introduced the charge at the peak of Europe’s energy crisis in 2022.

Central European countries said the tax harmed their efforts to ditch Russian gas. Germany acquiesced and said it would end the border levy this coming January.

(Updates with reaction of German economy ministry in eighth paragraph.)

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