As the European Union has been struggling to prepare for a possible total suspension of Russian energy supplies ahead of the winter season, gas storage has emerged as a national security priority.

The EU bloc has set mandatory levels to restock reserves in order to meet high demand. But how much authority do member states actually have over those stocks in the event of an emergency.

Storage capacity in the EU is unevenly distributed with large facilities in France, Germany, Italy and the Netherlands. Germany is home to the largest stores in the bloc. The EU has capacity to store more than 117 billion cubic meters (bcm) of natural gas, according to GIE.

There is a lack of transparent data on who controls the stockpile, but it turns out that national governments have little to no control over the supplies.

Only about 10% of the gas in storage facilities from Italy to the Netherlands is under the direct control of public officials through national strategic reserves, according to data compiled by Bloomberg.

The rest is in the hands of international trading companies, like Glencore and Vitol, energy utilities and industrial groups. Those companies are free to sell to the highest bidder, even if it’s in another country, while their main interest is maximizing their profit margins.

The bloc’s gas network is supposed to work by allowing supplies to flow between markets. As long as there’s enough fuel in the system, it should balance out.

However, in an emergency, governments can order a required amount of gas from those reserves. Richer countries can outbid poorer countries for gas supplies. That could leave poorer neighboring states facing shortages.

The creation and procurement of gas and storage sites for government-controlled strategic reserves is among the proposals for the bloc’s energy security in the long term.

That would mean a centralized European platform where member states can jointly buy gas, and use this to create strategic reserves.

In other words, countries would share their gas storage with one another. However, the process of setting up such a platform could take years.

The gas-sharing pacts between member states are part of a larger EU mechanism for energy emergency situations.

They guarantee that one country will supply the other if they don’t have enough gas to provide for the needs of households and social services, which enjoy special protection under EU law.

Joint purchases of natural gas by member states could help avoid competition within the bloc and further rises in prices, the European Commission says.

However, with the worsening energy crisis across the union, some nations have been refraining from engaging in any such solidarity deals.

The bloc’s gas network hasn’t operated under a scenario like the current crisis, experts say, noting that much will depend on the weather.

According to consultancy Wood Mackenzie, in the event of a cold winter, inventories could sink below 10% by the end of March 2023, which could set off a renewed scramble for supplies ahead of next winter.

Some traders and analysts have warned that the real test will be refilling stores next year without Russian gas supplies and as the EU target rises to 90% by November 1, 2022.

RT. com / ABC Flash Point Oil & Gas Storage Blog News 2022.

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Parker Joe River
Parker Joe River
23-10-22 10:58

comment image

Artful Dodger
Artful Dodger
Reply to  Parker Joe River
23-10-22 11:01

Probably won’t work.
My ex-wife hated when I shared gas in our Dutch oven.