EU proposal to extend gas filling targets due in 1Q

: Natural gas
25/02/18

The European Commission will publish a legislative proposal on the extension of its gas storage regulation before the end of March, according to a leaked document seen by Argus.

The commission will work with member states to "promote more co-ordinated and flexible gas storage refilling, including with dynamic targets to reduce system stress linked to gas storage refilling and support summer preparedness", according to the document.

The existing regulation — which obliges member states to fill their storage capacity to 90pc by 1 November, but with derogations for certain countries — expires at the end of this year.

The EU's storage fill mandate has supported front-summer contracts across European hubs in recent months, as stronger underground storage withdrawals than in recent years have pushed up expectations of summer injection demand. Summer 2025 contracts have disconnected at well above winter 2025-26 prices.

Filling up storage before winter in the context of inverted seasonal spreads has become a growing concern of member states. Some countries, including Germany, have called for the storage fill requirements to be less rigid.

Last week, discussions between member states and the EU's gas co-ordination group regarding the potential relaxation of EU storage obligations led to tightened summer-winter spreads. The TTF summer 2025-winter 2025-2026 spread was €2.75/MWh on 17 February, in from €5.29/MWh a week earlier.

Tighter gas market supervision

The commission will consult stakeholders on tightening the supervision of gas-trading markets, according to the document.

The consultation will cover exemptions from conduct and prudential rules applicable to investment firms for which gas derivatives trading is "ancillary" to their main commercial business, as well as position limits in EU spot markets. It will consult on the joint supervision of gas trading by energy and financial regulators and the creation of a database gathering all open positions held by market participants.

These measures were promoted in a report by former European Central Bank president Mario Draghi published in September last year. Draghi warned that mounting activity and speculation in the gas derivatives market could lead to price volatility and called for greater oversight of gas trading.

The commission had already set up a gas market task force earlier this month to scrutinise European gas markets and identify behaviours that distorted prices, according to the document. The gas market task force will provide recommendations by the fourth quarter of this year.

By Isabel Valverde

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25/03/20

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