German gas outflows tumble in August as THE smashes through previous records

Dwindling Russian gas supplies have put a dent on outward German flows during the first half of August, with widening risk premiums pushing the German THE even higher to mark fresh records, an analysis from S&P Global Commodity Insights showed.

German gas outflows to major neighboring markets have been hovering at just 63 million cu m/d for the period Aug. 1-14, some 39% lower than the July daily average, according to data from S&P Global Commodity Insights, on the back of successive curtailments of Russian gas flows through the 55 Bcm /year Nord Stream pipeline.

Gas flows through the Nord Stream pipeline, connecting Russian supply directly with the German market have been hovering close to 31 million cu m/d since their curtailment on July 27, 80% lower than the average daily flows during May 2022, before the disruption in the pipeline's operations began.

The lower gas outflows from Germany could become the new normal, according to a European gas trader, following the drop of Russian supply to the country, explaining that "at the moment we are going through very low-demand period, with a well-supplied Italy from LNG and flows from Africa."

"The true test of solidarity will be when countries like Italy and Austria will have to cover peak demand in the winter and how much will they be willing to pay to make the gas flow from Germany, if the existing infrastructure will be enough to cover that," they concluded.

Still, the dwindling Russian gas flows have already contributed to a substantial easing of German gas outflows to neighboring markets in early August, with volumes heading to the Czech Republic averaging just 28 million cu m/d for the period Aug. 1-14, some 35% lower than the July daily average and some 56% lower than the volumes observed during August 2021.

Similarly, German gas outflows to Switzerland have collapsed to just 1 million cu m/d for the first two weeks of August, some 96% lower than the July average and 69% below the volumes reported during August 2021.

The Austrian gas market also witnessed a drop in gas inflows from Germany, last reported by S&P Global Commodity Insights close to 17.5 million cu m/d during the period Aug. 1-14, some 11% lower than the July average, but with flows remaining substantially higher on the year, with daily volumes during August 2021 averaging at just 5 million cu m/d.

Notably, both the French and the Polish market saw a mild uptick in gas flows from Germany during the period Aug. 1-14 compared to the July average, despite remaining substantially lower on the year.

German THE at unprecedented highs

Amid a tightening European gas market, the German THE day-ahead price was last assessed by Platts at a fresh record high of Eur218.925/MWh Aug. 15, gaining some 9.33% on the day, surpassing the previous assessment record of Eur213/MWh on March 7.

At the same time, the THE month-ahead prices also smashed through the previous highs to be assessed by Platts at Eur221.95/MWh Aug. 15, gaining 7.51% on the day, according to data from S&P Global Commodity Insights, overcoming the previous assessment record of Eur215.025/MWh March 8.

Platts is a part of S&P Global Commodity Insights.