Netherlands Pushes to Scrap EU Gas Storage Mandate After $1.14 Billion Bill
India Weighs Mandatory Imported Coal Blending as Plant Stocks Crumble What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… The Netherlands considers that the current EU system of gas storage targets ahead of winter is inadequate and burdens governments that have to pay for meeting the EU-wide obligations.
The Dutch government has already spent almost $1.14 billion (1 billion euros) this summer season alone on building up inventories, while this task should fall mostly on the gas market participants, Climate Minister Stientje van Veldhoven said in a letter to Parliament cited byBloomberg.
The Netherlands is a relatively small EU gas consumer, but it is a major natural gas hub and home to the EU’s benchmark gas trading futures market, the Dutch Title Transfer Facility (TTF).
The current EU rules on mandatory gas storage levels consider storage capacity rather than consumption, the Netherlands argues.
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Moreover, this spring-summer filling season has been particularly difficult and very expensive for the EU member states as natural gas prices soared in the wake of the Iran war and the very few LNG cargoes that make it through the Strait of Hormuz.
The price spike and the concern about near-term supply have deepened the backwardation structure of European gas prices, discouraging holding supply for later deliveries.
Backwardation is the market structure in which prompt contracts trade higher than those further out in time, signaling concerns about immediate supply.
Weeks ago, the Dutch gas network operator said the Netherlands wouldmiss its targetto fill natural gas storage sites ahead of the winter, in one of the first evidence-based signs that Europe may be struggling to have sufficient supply for a harsh winter.
Germany, the EU’s biggest economy,is consideringexpanding a key market incentive to encourage traders to raise gas storage levels ahead of the winter.
The government is looking to use the existing market tool, the autumn tender for Long Term Options, or LTOs, on a larger scale.
Germany has the world’s fourth-largest natural gas storage capacity, but this capacity was only 57% full as of September 24, according todataby Gas Infrastructure Europe.
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