EU Nations Weigh New Tools to Make Gas Storage More Flexible

(Bloomberg) -- European Union nations are considering empowering the bloc’s regulatory arm to allow more flexible gas storage goals if prices of the fuel surge due to speculation or market manipulation.

Proposed changes to the bloc’s storage regulation include a provision mandating the European Commission to increase an already planned 5 percentage-point deviation from the 90% storage target. Such a move could be made for one filling season “in case of persistent unfavorable market conditions,” according to the proposal drafted by Poland, which was seen by Bloomberg News and shared with other EU countries late Friday.

The regulation that the EU’s 27 member states are discussing was put forward by the commission in early March with the aim of extending the 90% gas storage target to 2026 and 2027. While some countries are pushing for it to also affect the 2025 filling goal, the latest draft stops short of addressing their demands. 

The extension of EU gas storage goals, which were introduced during the energy crisis following Russia’s invasion of Ukraine, is designed to provide the region with energy security through a cold winter. However, some nations complain that the goal’s rigidity can contribute to market speculation, as traders anticipate purchases before the deadline.

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. The lack of clarity about EU policy is creating market uncertainty, just as injections into storage are set to start April 1. That’s pushed up prices and widened the spread between summer and winter contracts, potentially delaying the pace of stockpiling.

During previous rounds of talks in the past weeks, EU nations discussed amendments to make the targets more flexible and lower the cost of replenishing reserves. The changes already include replacing the Nov. 1 deadline with a broader range of Oct. 1 to Dec. 1, and allowing a deviation of as much as 5 percentage points for each member state from gas storage targets over the next two years if market prices excessively boost the cost of filling.

Traders are closely watching the debate for clues on whether the final shape of the draft regulation changes the framework for the current filling season. There are doubts whether such a move would be legally sound, and no decision has been taken yet on whether it could be incorporated into the final list of amendments sought by member states.

The new amendments will be discussed by member states at a meeting on April 1 and a final draft may be presented before the next gathering a week later. It could subsequently be submitted to an April 11 meeting of EU ambassadors for approval as a common position of member states.

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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