EU Agreement on gas storage is unprecedent – former EP President

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EU countries have committed to filling underground gas storage facilities on their territory, aiming for 85% – at least – of their capacity by 1 November 2022 as Member States strive to cut energy dependence from Russia. The filling target shall be set at 90% for the following years.

Jerzy Buzek, an MEP and a former EP President said that “this is another unprecedented achievement considering the tight schedule, due to the Russian war in Ukraine. What is at stake here, is securing gas supplies for next winter for all Europeans – citizens, protected customers, SMEs, energy-intensive industries. This is why it is remarkable that we now have an EU-wide target for filling gas storages by 1 November 2022”.

Last week, the European Parliament and the EU Member States reached an agreement on new rules that will oblige EU governments to fill their gas storages ahead of this winter and in the coming year, as well as to ensure that the owners and operators of these storage systems do not put the security of energy supply at risk.

Russia supplies 40% of EU gas and last month cut supply to Poland and Bulgaria after they refused to pay for the fuel in roubles. Gas powers factories, heats homes and produces electricity across Europe, and countries are racing to fill storage to protect against potential supply shocks.

Buzek, who is the European Parliament Chief Negotiator on the Gas Storage Regulation underlined the strategic importance of gas storage facilities: “Data shows that the storage facilities supply 25-30% of gas consumed every winter. In addition, storage facilities are considered critical infrastructure and contribute to absorbing price and supply shocks. Therefore, we are putting in place a mechanism which will ensure that gas storages in the EU are no longer controlled by those who fuel speculative price rises and supply crises.”

Buzek stressed another important achievement, which is a provision on a voluntary mechanism for joint procurement of natural gas. “This is an idea that I first presented in a joint declaration with Jacques Delors in 2010 and which is now finally a reality. I trust that EU governments – supported by the European Commission – will make the best use of this possibility to unite their purchasing power when procuring gas on the global energy market.”

Replacing Russian natural gas will be much more difficult than replacing oil and coal, due to differences in supply infrastructure, transportation and storage. While part of the long-term solution lies in the promotion of renewable energy sources and energy efficiency savings, the EU will nevertheless require large volumes of natural gas imports in the short and medium term.

Since most of Europe’s pipeline infrastructure is organised to import Russian gas, alternative supplies will mostly have to come by sea in the form of liquefied natural gas (LNG). To guarantee security of supply, the EU will also need to ensure gas storage levels remain high so Member States can cope with a sudden interruption of gas supplies. However, both LNG terminals and gas storage capacity are unevenly spread across Europe, with important policy implications. There is a clear need to frontload investment to diversify supplies and fill storage, but uncertainty as to who can or should finance these changes. There is also the question of how to coordinate policy action at EU level, how to buffer against negative social and economic consequences, and how to ensure coherence of security of supply with the ‘fit for 55’ package and the European Green Deal.

Buzek also mentioned that the negotiated regulations open up the possibility for Member States to use gas storages in Ukraine and other countries of the Energy Community. “The European Parliament strongly encourages all Member States to participate in such a cooperation – it would have a practical, as well as a symbolic dimension”, he concluded.

The European Parliament intends to vote on this agreement in the June plenary session. The institution’s President has insisted in recent weeks on the need to eliminate completely dependency on Russian energ. According to a report by Reuters, since the end of March, European Union and United Kingdom (EU28) gas storage has risen by 164 terawatt-hours (TWh) compared with a ten-year average increase of just 107 TWh. By May 18, the volume of gas in storage was slightly above the ten-year average (+2 TWh) up from a large deficit at the end of January (-134 TWh). Futures prices for deliveries this summer are already softening to slow storage additions and encourage more consumption by industrial users and power producers.

Commissioner for Energy Kadri Simson also welcomed the agreement saying that the speediness of the agreement demonstrates EU’s unity in response to Russia’s invasion of Ukraine.

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