Algeria has emerged as a key player in reinforcing Germany's gas supply chain, particularly as the country prepares for winter with historically low storage levels. According to Ulf Heitmüller, CEO of German gas company VNG, Algeria's role in diversifying gas imports has become increasingly vital. This development comes as Germany's gas storage facilities are currently filled to only 57%, significantly below the European average and a record low for the end of September.
VNG has been securing gas supplies from Algeria since January 2024, making it the first German company to purchase Algerian gas transported via pipelines. This move is seen as a strategic step towards enhancing energy security in Germany. The company has also signed contracts with Azerbaijan and relies on pipeline supplies from Norway. These efforts aim to mitigate the impact of reduced Russian gas supplies through pipelines following the conflict in Ukraine.
In July 2026, Algerian energy company Sonatrach and VNG signed a contract to increase the volume of natural gas supplied to the German market starting January 2027. This agreement underscores the strengthening commercial ties between the two nations. The partnership is part of a broader strategy to enhance energy cooperation, including projects related to future energy sources such as hydrogen.
The current low storage levels in Germany have raised concerns about energy security. Despite these challenges, Heitmüller emphasized that the diversification of gas sources and access to liquefied natural gas (LNG) have made Germany's gas system more resilient compared to the energy crisis in 2022. He noted that VNG has rearranged its portfolio to ensure it can meet its obligations to customers even during periods of high demand.
European gas prices have surged by over 50% since the beginning of the year, reaching approximately €75 per megawatt-hour. This increase is attributed to the closure of the Strait of Hormuz, impacting global LNG supplies amid the Iranian conflict. The European Union's Commissioner for Energy, Dan Jørgensen, has warned of a potential energy price crisis this winter, urging member states to continue filling gas storage and reducing demand.
In response to these challenges, the German government has supported tenders for providing backup gas supplies for the first quarter of 2027. This approach aims to ensure a stable energy supply without directly intervening in gas injection operations. Heitmüller welcomed this initiative, stating it provides incentives for gas storage without distorting the market.
Looking ahead, VNG and Sonatrach are collaborating on future energy projects, including the ALTEH2A (Algeria-Europe Hydrogen Partnership) and the SoutH2 Corridor, which focus on producing hydrogen in Algeria and exporting it to Europe. These projects, along with a memorandum of understanding on green hydrogen and methane emission reduction, highlight the growing cooperation between Algeria and Germany in the energy sector.
Key points
- Algeria has signed a contract with VNG to increase natural gas supplies to Germany starting in January 2027.
- Germany's gas storage levels are at a record low of 57% as of the end of September.
- European gas prices have increased by over 50% since the beginning of the year due to global supply impacts.
