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European Commission welcomes political agreement on winter gas storage

The European Commission has welcomed the political agreement reached between the European Parliament and the EU Member States on the legislative proposal for minimum gas storage obligations proposed by the Commission in March 2022.

Indeed, accelerating the green transition will reduce emissions, reduce dependency on imported fossil fuels and protect against price hikes. However, the current geopolitical situation requires additional short term measures to deal with the market imbalances for energy and for securing supplies in the years ahead and well-filled gas storage contributes to more secure gas supplies for the winter of 2022-2023.

Over the last six months, an unbalanced gas market has led to a sharp increase in gas prices. The EU level of filling of storage during the winter was largely below the level of the preceding years, 10 per cent less in percentage points in January. This has amplified uncertainties as regards the security of supply and the volatility of prices.

The Commission’s proposal seeks to address three specific problems. First, the difference in gas prices between summer and winter is important to attract gas in storage and, given the ongoing geopolitical developments and high energy prices, an estimate of the foreseeable summer/winter spread is very unreliable. Second, the Commission and the Gas Coordination Group carried out an EU wide reinforced risk preparedness analysis in February 2022 which indicated that while the winter of 2021-2022 was eventually safe, there could be a risk of insufficient gas in storage ahead of the next winter 2022-2023. Optimising the storage capacities over the filling season would require immediate injection from the start of the filling season (April 2022). Finally, gas storage levels in 2021-2022 have proven to be particularly low at sites owned by third-country entities. This has contributed to nearly half of the unusually low storage level this year.

So, according to the proposal, already this year, Member States will need to reach a minimum 80 per cent gas storage level by 1 November to protect against potential interruptions to supply. From 2023, the target will be raised to 90 per cent full gas storage by 1 November.

“Filling the EU’s gas storage before the next winter is crucial for ensuring our security of supply,” said Commissioner for Energy Kadri Simson. “Today’s agreement on the Commission’s storage obligation proposal is therefore an important step towards being prepared for the next heating season, guaranteeing that our gas storage will be at least 80 per cent full. I am grateful to the European Parliament and the French Presidency of the Council for the exceptionally swift agreement that demonstrates EU’s unity in response to Russia’s invasion of Ukraine.”

Despite the urgency, the proposal takes into account that Member States will need some time to set up the necessary measures to ensure storage filling. The proposal, therefore, provides for a phase-in mechanism, with rules which are less stringent for the year 2022 than for the following years (for example, lower filling target, fewer intermediary targets, an obligation for the Commission to take the limited time of application into account in its enforcement).

In particular, for what concerns Central and Eastern European countries, the Commission expects Croatia to begin with the lowest level of storage, at 58 per cent by August, which will have to reach 65 per cent by September and 73 per cent by October. Croatia is closely followed by Bulgaria (59 per cent of filling target by August) and Hungary (60 per cent). To lead the region will be Poland with an estimated 78 per cent of storage filled already by August. Also, Latvia is expected to provide storage above the EU average (63 per cent) reaching 64 per cent by August, 69 per cent by September and 75 per cent by October.

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