European Union countries consider new methods to enhance flexibility in gas storage
European Union countries are exploring ways to increase the flexibility of gas storage regulations in response to price surges caused by speculation or market manipulation. The proposed changes would allow the European Commission to adjust the storage targets beyond the planned 5 percentage-point deviation from the 90% target under certain conditions. This adjustment could be made for a single filling season in cases of persistent unfavorable market conditions as outlined in the proposal drafted by Poland and shared with other EU nations.
The proposed extension of the gas storage targets follows the energy crisis triggered by Russia’s invasion of Ukraine. The goal of these targets is to enhance energy security in the region during harsh winters. However, some countries have raised concerns that the rigid nature of the goals could lead to market speculation as traders rush to make purchases before the deadlines.
Factors such as cold weather, reduced wind generation, and disruptions in Russian gas supplies through Ukraine have accelerated the depletion of gas inventories in the region. The lack of clarity in EU policies has contributed to market uncertainty, particularly as the injection of gas into storage is set to begin on April 1. This uncertainty has driven up prices and widened the gap between summer and winter contracts, potentially affecting the rate at which gas reserves are replenished.
Recent discussions among EU member states have focused on amending the gas storage targets to make them more flexible and cost-effective. These discussions entail replacing the November 1 deadline with a broader window from October 1 to December 1. Additionally, they involve allowing member states to deviate up to 5 percentage points from the storage targets over the next two years if market prices significantly increase the cost of filling.
Traders are closely monitoring these debates to assess how the final changes to the regulations will impact the current filling season. There are uncertainties surrounding the legality of implementing these changes, and no definitive decision has been reached on their inclusion in the final list of amendments. The proposed amendments will be further deliberated by member states on April 1, with a final draft potentially being presented before the subsequent meeting a week later for approval as a common position.
The gas storage regulation is being discussed separately by EU Council member states and the European Parliament. Both institutions have the authority to propose amendments, and the final version will be finalized through negotiations involving the commission.