Swissgas President André Dosé made headlines with his call for a state guarantee. However, the federal government still sees no reason to rush to the gas suppliers’ aid.
Gas pipes in the garage of a family house.
The Swiss gas industry is feverishly procuring natural gas so that Switzerland can get through the winter unscathed. Or at least she should. According to André Dosé, President of Swissgas and the Gasverbund Mittelland, suppliers are reaching their limits when it comes to financing natural gas deliveries.
In the meantime, the gas prices have risen so much that the suppliers would demand astronomically high financial guarantees for the options for additional gas deliveries, the former Swiss boss said in a recent interview with the NZZ. Most banks and shareholders are therefore no longer willing to provide these guarantees in the required period. In order to secure the procurement in view of the horrendous prices, the federal government must help the gas companies with a state guarantee, according to Dosé’s demand.
Enormous uncertainty in the market
But is such intervention by the federal government really necessary? A survey by the NZZ shows that some of the five regional companies that are currently trying to secure gas volumes that are still available at foreign trading centers are struggling with financing problems. “We are aware of the problem that Mr. Dosé describes,” says Deborah Burri, spokeswoman for Erdgas Zentralschweiz (EGZ). “Large amounts of energy have to be purchased in advance, but they can only be delivered at a later date and can therefore only be billed at that point.” This increases the need for liquidity, the spokeswoman said. However, she states that the financing of the gas procurement can currently be secured by the shareholders of EGZ, the suppliers of the cities of Lucerne and Zug.
Rudolf Summermatter, Managing Director of Open Energy Platform AG, which procures gas and storage capacities abroad on behalf of the Gasverbund Ostschweiz, expresses a similar view. He also states that financial securities have recently been increasingly demanded for commercial transactions due to the enormous uncertainty on the market. However, it is still possible to purchase options for additional gas supplies on your own. “The banking institutions are willing to provide these guarantees if there is reinsurance from our owners, the cities and communities.” However, Summermatter also emphasizes that in the fall you will be dependent on financial support from the federal government if prices continue to rise.
Gazenergie, the association of the gas industry, does not want to join Dosé’s demand – at least not yet. “At the moment we cannot comment on a demand for state guarantees,” says Michael Schmid, head of public affairs at the association. However, he emphasizes that the European gas market is tense. Although there is currently no actual market failure, a further deterioration cannot be ruled out. Developments in Germany in particular are therefore being followed very closely.
The federal government apparently sees no reason to consider introducing a state guarantee for gas companies. One does not want to comment on Dosé’s demand for a state guarantee, explains Fabien Lüthi, spokesman for the Federal Office of Energy. Gazenergie President Martin Schmid said at the federal press conference last week that the gas industry does not need state aid in the current situation. “We are currently relying on this information,” said the spokesman.
The federal government requires that the physical gas reserve in foreign storage facilities must amount to 15 percent of annual gas consumption by autumn. In addition, 20 percent of non-Russian gas for the winter can be accessed by purchasing options. The Federal Council passed this concept in an urgent ordinance in mid-May. However, according to Dosé, the measures taken to avoid the crisis came too late. “We should have secured gas for one or two billion francs three months ago,” said the former Swiss boss in an interview with the NZZ. But that didn’t happen. Now the procurement costs three times as much.
French-speaking Swiss providers confident
Meanwhile, different signals are coming from the industry as to whether the gas reserves required by the Federal Council can still be procured in time for autumn. René Bautz, Managing Director of the western Swiss utility Gaznat, which has state treaty-secured storage facilities in Etrez near Lyon, is optimistic: “We have acquired the necessary capacities to achieve the Federal Council’s goal. At the same time, the campaign to feed gas into these storage facilities is making good progress.” One benefits from the fact that purchasing is mainly focused on the French market, which is less dependent on Russian gas. The resolutions of the Federal Council were also anticipated at an early stage.
The German-Swiss regional companies are apparently having a harder time procuring gas. The implementation concept for creating the winter reserve was only approved for implementation by the Federal Council at the end of June, says Rudolf Summermatter from the Open Energy Platform. Before that, the regional gas network operators would not have had the necessary legal certainty to be able to become active on the market.
The background: the individual gas suppliers have to spend up to 300 million Swiss francs to purchase the large quantities of gas and fill the storage facilities. However, until recently it remained unclear whether they would be allowed to pass on the additional procurement costs to their customers in the form of network charges. Because these and other questions remained unanswered for a long time, some gas suppliers held back from purchasing gas for a long time. They are now forced to buy on significantly worse terms, as the situation on the gas market has deteriorated since the Nord Stream 1 pipeline cut the supply volume.
The next few weeks will show whether the federal government will have to bite the bullet and whether a state guarantee will be needed. If the situation on the gas market continues to deteriorate, calls for a state guarantee will become louder. It is quite possible that after the electricity companies, for which the Federal Council wants to put up a protective shield, the gas suppliers will soon also need a state lifebelt.