EU Nations Push to Factor Market Conditions in Gas Storage Goals

(Bloomberg) -- European Union member states are pushing for a possibility of deviating from gas storage targets over the next two years if market prices excessively boost the cost of replenishing reserves.

A provision to allow a deviation of as much as 5 percentage points for each member state in the case of “unfavorable” market conditions was included in a new set of amendments drafted by Poland, which holds a rotating presidency over member states’ meetings. The document, seen by Bloomberg News, was shared with other EU countries late Friday and will be discussed at a meeting of energy officials from national governments on March 27.

The changes are aimed at adding further flexibility for member states to reach the 90% gas storage target that the European Commission wants to extend to 2026 and 2027 under a proposal put forward earlier this month. 

In the first raft of amendments unveiled last week, Poland already proposed replacing the Nov. 1 date for meeting filling goals with a range of Oct. 1 to Dec. 1. after current provisions and higher demand added to an increase in gas prices.

A combination of colder weather, low wind generation and the loss of Russian supplies through Ukraine has caused the region to draw down inventories of gas more quickly this year. Concerns about refilling were pushing up prices and widening the spread between next summer and winter contracts. 

The second set of changes presented by Poland follows a meeting of energy officials from member states on Wednesday, where countries including France, Germany, the Netherlands, Slovakia and Hungary were pushing for an additional 10% flexibility, which would effectively lower the pre-winter threshold to 80%, according to people familiar with the matter who asked not to be identified because they are allowed to speak publicly on the matter.

The text may be amended as talks will continue on topics including clarifications on reaching the filling target, low calorific gas, and markets conditions, according to the document. Poland aims to reach a “stable text” in the next revision.

The storage filling targets, introduced amid an unprecedented energy crisis following Russia’s invasion of Ukraine, were designed to ensure countries have enough gas to get through the heating season. Recently, however, market participants have worried that replenishing reserves will be difficult following stronger-than-expected withdrawals, and after the region lost some of its previous sources of supply.

The gas storage regulation is being discussed in parallel tracks by member states in the EU Council and by the European Parliament. Each institution has the right to propose its own amendments, and the final version will be ironed out in trilateral negotiations that also include the commission.

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