EU to discuss creating strategic gas reserve
EU leaders will discuss the creation of a strategic gas reserve at the European Council summit on October 21-22 in response to record high gas prices, European Commission president Ursula von der Leyen said at a press conference on October 5.
The EU currently lacks a coordinated policy for maintaining strategic gas reserves, with each member state having its own mechanisms in place for keeping enough gas in stock. But there are concerns of supply shortages this winter, given that reserves are at an unusually low level for this time of year. According to Gas Infrastructure Europe, storage capacity is currently only 75.7% filled, versus 95.2% a year ago.
The low level of storage is chiefly the result of record high gas prices in recent months, as a result of a sharp rebound in demand coupled with sluggish supply growth. At these prices, companies have little incentive to place gas in storage. The futures contract for November gas delivery at the Dutch TTF hub exceeded $1,300/'000 m3 on October 5.
At a conference in Estonia's capital Tallinn, von der Leyen drew attention to the EU's heavy dependence on oil and gas imports. Some 90% of the bloc's gas comes from abroad, along with 97% of its oil.
"What is the reason for the rise in gas prices? Of course globally the economies are picking up, so demand is rising, but supply is not rising accordingly," she said. She added she was "very grateful that Norway is stepping up its supply, but this does not seem to be the case for example in Russia."
Russia's state gas supplier Gazprom has faced criticism for withholding gas supply and exacerbating the gas crisis enfolding in Europe, although the company insists it is fulfilling its contractual obligations.