Natural gas reserves will last less than three months if Russia cuts off supply, the regulator said

Germany’s energy regulator has warned that the nation will struggle to have enough natural gas to get through the coming winter, even if reserves are topped up in line with government targets, Bloomberg reported on Wednesday.

The Federal Network Agency says natural gas storage sites are currently 77% full, which is two weeks ahead of schedule. However, according to the regulator, the target of being 85% full by October could be challenging, taking into account the risk of a cooler-than-normal autumn and the chance of further supply disruptions.

It further noted that the November target of 95% seems “hard to achieve” because some storage sites require more time to fill. Even if that target is reached it would cover less than three months of heating, industrial and power demand in case Russia cuts off gas supplies completely, the FNA warned.

“I cannot promise you that all storage facilities in Germany will be 95% full in November, even under good supply and demand conditions,” said FNA president Klaus Mueller. “In the best-case scenario, three-fourths of them will meet the target.”

The German government, which has been racing to fill its winter stocks, has also urged businesses and citizens to lower consumption, warned of energy rationing and this week slapped a levy on gas use.

Crude purchases restarted in July after falling to zero in the previous month

Japan resumed its purchases of Russian oil in July, according to information released on Wednesday by the country’s Finance Ministry.

In the previous month, imports fell to zero as local refiners started to phase out Russian crude amid Ukraine-related sanctions.

While the ministry did not disclose the exact volume, it said July oil imports from Russia were 65.4% lower than the same time last year. The volume of liquefied natural gas (LNG) imports from Russia also decreased by 26.1% compared to July 2021, while coal imports dropped by 40.1%.

Despite the decline in physical volumes, the value of Russian fuel exports to Japan increased by 45.1% compared to last year due to rising global commodity prices.

In May, Japanese Minister of Economy, Trade and Industry Koichi Hagiuda vowed that Tokyo would gradually reduce its dependence on Russian energy resources, but said it could not give up Russian oil immediately. Japan also supports the G7 plan to impose a price cap on Russian oil, which is currently under discussion.

Meanwhile, Japan has also significantly increased its crude imports from the Middle East. They rose 10%, while total oil imports from all countries to Japan rose by 3.8%. The Middle East region accounts for over 90% of Japan’s total oil consumption, but due to its proximity Russia is a valuable supplier of energy for the country.

Bailed-out Uniper blames shrinking gas flows from Russia for its disastrous financial performance

German electric utility Uniper suffered a €12.3 billion ($12.5 billion) net loss in the first half of 2022 due to a sharp decline in natural gas supplies from Russia, according to the company’s earnings statement released on Tuesday.

“Uniper has for months been playing a crucial role in stabilizing Germany’s gas supply – at the cost of billions in losses resulting from the sharp drop in gas deliveries from Russia,” Chief Executive Officer Klaus-Dieter Maubach said in the statement, as cited by Bloomberg.

Natural gas flows from Russia, Germany’s largest gas supplier, have been declining over the past several months due to technical issues resulting from Ukraine-related sanctions imposed on Moscow. As a result, Uniper has been forced to buy gas on the spot market at much higher prices, to make up for the shortfall. The company’s financial situation has become so dire that Berlin was forced to step in last month and partly nationalize the company, acquiring a 30% stake.

According to the company’s statement, it is currently unable to issue an adequate forecast for this year’s earnings “because of the volatile environment,” but noted that a “substantial negative result” is likely.

In an effort to tackle the impending energy crisis in the country, Berlin recently urged residents to lower consumption, and launched the process of reviving coal power plants, while placing an additional levy on gas use.