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LONDON (ICIS)–EU gas stocks must be at least 80% full by September 30 to ensure the EU is better prepared for next winter, according to a document drafted by the European Commission and consulted by CIHI. To reach such a level, the commission suggests several measures to be implemented by the Member States, with the cost shortfalls to be covered by the States.

This draft dossier indicates what should be included in the energy communication of the commission which will be announced next week. This Communication will contain measures that Member States can implement to mitigate the rise in energy prices and lessen its impact on consumers and businesses. This will complement a similar so-called toolkit announced by the commission last October.

INJECTION SPRAY

Assuming an average withdrawal rate of 191 million cubic meters (mcm)/day, the March withdrawal rate of 2017-2022, ICIS estimates that commercial storage sites in the EU27 will be filled to just under 17 % at the end of the gas winter on March 31, holding 16.1 billion cm of gas.

This means that to reach 80% of the gas in storage by September 30 across the EU, shippers would need to inject around 61.6 billion m3 during the gas summer, or around 336 mcm/day.

These figures include EU storage sites operated by Gazprom.

Aggregate EU27 storage levels were particularly low at the start of the 2021 gas winter as stocks operated by Gazprom were very low.

However, even if these storage sites operated by Gazprom have not been refilled, the total volume they represent is less than the remaining 20%, ie 19.4 billion m3. This means that other storage sites could be completely filled and the 80% threshold would be reached.

EU strategic stores, which are not included in the above estimates, remain at around 96% capacity, or just under 9 billion cubic meters.

The commission’s draft document projects that the storage could be 10-20% full in the spring of 2022 depending on weather conditions, which is in line with ICIS projections. The 10 to 20% scenarios would require the injection of 58.3 to 70 billion m3 into commercial storage.

INJECTION OBLIGATION PROPOSALS

In the draft, the commission proposes a series of measures to ensure summer injections, in particular:

– an obligation for storage users to store a minimum volume of gas in underground storage

– an obligation for storage owners to put storage capacity on offer, with cost shortfalls being covered by the State

– a request to transmission system operators or balancing operators to purchase and manage strategic gas stocks

– increase the rebate on transmission tariffs to storage from 50% to 100% as an incentive to refill storage

The committee is also considering:

– the establishment of a legal obligation for Member States to ensure a minimum level of storage on 30 September each year

– a requirement to take into account the risks associated with the control of strategic assets by third-country entities.

Storage levels should also be determined by member state, taking into account the relative size and security of supply value of storages across the bloc, the draft document says.

GAZPROM EU STOCKS

Russian state-owned producer Gazprom has storage facilities in Germany, Austria, the Netherlands and the Czech Republic with a combined storage capacity of 13.9 billion cubic meters (bcm).

Concerns about Gazprom’s strategy for its EU-based storage surfaced when, at the end of October, these facilities contained just 3.9 billion m3 of gas, compared to an average of 12.7 billion m3 in the same period. of the year in 2017-2020. These storage facilities were also below the EU average for non-Gazprom storage.

Russian President Vladimir Putin ordered Gazprom to start injecting into these facilities as soon as Russian domestic injections were completed in early November. But those storage facilities associated with Gazprom only peaked at 4.2 billion m3 in late November and have been declining since then.

Gazprom was at the center of the Commission’s investigation launched last year, which examines possible distortions of competition by companies active in EU gas markets. In its draft document seen by ICIS, the commission said that Gazprom is “showing unusual business behaviour” and pointed out that storage operated by Gazprom in the EU is about 16% full compared to 44% for non-storage. – Gazprom.

LNG

The block’s supply is diversifying thanks to the increase in LNG imports, which could partly offset the drop in pipeline deliveries. The committee document says this was thanks to EU energy diplomacy.

More LNG has arrived in the EU since the start of the year, triggered by EU hub prices reaching such levels that they overtook Asian prices.

Additional reporting by Gretchen Ransow.

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