EU calls for 90% gas storage as energy crisis continues

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ENERGY & UTILITIES

The European Commission has proposed a new law requiring natural gas storage in member states to be kept to 80% capacity by November as the bloc continues to grapple with skyrocketing energy prices exacerbated by the fallout of the war in Ukraine.

The proposed measure is one of several being considered by the EU as it looks to cut Russian gas imports by 100 bcm by the end of 2022. If passed, it would require that member states ensure their underground gas storage is filled to a minimum of 80% capacity by 1 November 2022, rising to 90% for the following years.

Read more: EU mulls measures to mitigate energy "price shock", says Commissioner

The EU's current rules on gas storage were designed with exceptionally cold winters or small-scale disruptions to supply in mind. However, Russia's invasion of Ukraine has underlined the volatility of the gas market and heightened concerns over the security of supply.

This winter saw unprecedented low storage levels across the bloc due to global high demand. 

In a press release, the Commission said that gas storage sites owned by "some third country operators" have been particularly underfilled - a thinly-veiled reference to Gazprom, Russia's state-owned gas company which owns storage facilities in Germany, the Netherlands and other EU countries.

Energy Commissioner Kadri Simson said: "Global and European energy markets are going through turbulent times, particularly since the Russian invasion of Ukraine. Europe needs to take swift action to ensure our energy supply for next winter, and to alleviate the pressure of high energy bills on our citizens and businesses.

"Today's proposals are another step forward in our intensive work on this front."

The legislative proposals mapped out by the Commission also include the creation of a Task Force on common gas purchases on a bloc-wide level, as well as a storage certification system which it says would prevent "outside influence over critical infrastructure" from non-EU suppliers, such as Gazprom.

Such a system would mean that non-certified operators would be made to give up ownership or control of storage facilities inside the EU. In addition, for a gas storage facility to close down its operations it would need to have an authorisation from the national regulator. 

Read more: How the Russia-Ukraine war could impact energy markets

To incentivise the refilling of EU gas storage facilities, the Commission also proposed a 100% discount on capacity-based transmission tariffs at entry and exit points of storage facilities.

Several emergency measures to mitigate the impact of high energy prices have been put forward by Member States, which can be broadly grouped into two main categories: financial compensation and regulatory.

For the proposals to be adopted, they must first be passed by the European Parliament and agreed on by Member States in the European Council.

While the proposals have gone some ways to answer calls for intervention from EU nations such as Spain, officials in Brussels said that they have limited room for manoeuvre. 

Earlier today, Commission vice-president Valdis Dombrovkis told the European Parliament that the EU was assessing scenarios including a full stop of Russian gas supplies by next winter.

Read more: Ukraine war has "turbocharged" green hydrogen sector

Dombrovkis' remarks came a day after Russian President Vladimir Putin said that payment for gas sold to "unfriendly" countries would be requested in roubles instead of US dollars or euros. While the announcement provided an immediate boost to the beleaguered Russian currency, pushing it up to a three-week high against the dollar, it has still lost more than 20% of its pre-war value. 

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