Swissgas chief calls for state guarantees: press

Swissgas president Andre Dose believes regional gas utilities in Switzerland could require state guarantees to keep up with tighter natural gas markets and the need to secure financing to cover soaring spot guarantees, Reuters reported July 7.

His comments suggest parts of the European energy system may be moving toward a systematic collapse, caused by high spot prices, reductions in Russian gas flows and the need to rapidly fill storage centres before winter.

"In Switzerland, the four regional companies are responsible for the procurement of winter gas supplies. However, they and their procurement partners are reaching the limit in terms of financial viability and thus capacity to act," Dose said, in an interview with the Neue Zuercher Zeitung.

"Gas prices have risen so much that suppliers are demanding astronomically high financial guarantees for the options. Most banks and shareholders are no longer prepared to provide these guarantees within the required timeframe."

The four Swiss regional gas utilities are Erdgas Ostschweiz, Erdgas Zentralschweiz, Gasverbund Mittelland and Gaznat. They are all shareholders in Swissgas, together with VSG, the association of the Swiss natural gas indsutry.

Suppliers are increasingly looking for hefty financial guarantees for non-Russian gas deliveries, with Dutch TTF futures on July 7 averaging at €184/MWh, up from €22 one year ago. Zurich is preparing a 10bn Swiss franc ($10.7bn) support package for its electricity sector to help utilities maintain financial liquidity on an international scale, according to Swissinfo.

Switzerland is landlocked and as such sources gas from neighbouring EU trading hubs, leaving it exposed to reduced transit through the Nord Stream pipeline from Russia to Germany. This was ostensibly caused because the operator Gazprom needed to send a compressor station to Canada for repairs.