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    Czech govt confiscates unused gas storage capacity: press

Summary

Around 242mn m3 of storage capacity in the facility's Damborice reservoir has been withdrawn and placed under the state's special auction measures.

by: Callum Cyrus

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Natural Gas & LNG News, Europe, Liquefied Natural Gas (LNG), Corporate, Companies, Political, Territorial dispute, News By Country, Czech Republic

Czech govt confiscates unused gas storage capacity: press

The Czech Ministry of Industry and Trade is confiscating gas storage facilities held by 13 market participants, as they are not being used to keep emergency supplies in reserve, local news outlet CT 24 reported August 16.

A Gazprom-leased gas storage in the Moravia region, co-operated alongside local company Moravske naftove doly (MND), was one of the sequestered facilities.

Around 242mn m3 of storage capacity in the facility's Damborice reservoir has been withdrawn and placed under the state's special auction measures. These measures include the possibility of free auctions and  payments to traders in exchange for storing gas.

MND's parent company, KKCG, has launched talks with Prague to transfer shareholder rights for the 448mn-m3 Damborice reservoir to the Czech state.

The company said: "Damborice underground gas storage is part of the country's critical energy infrastructure. KKCG is conducting negotiations with the government with the aim of supporting the state in its efforts for energy independence from Russia,"

With the EU striving to hold 80% of overall storage capacity by November, the Czech "use-it-or-lose-it" principle forces market participants who have spare storage capacity, above a certain threshold, to give up injection slots to the state.

The state intervention mechanism for unused gas storages was written into Czech energy legislation in June. Prague had launched its first state purchase of gas for storage two months earlier, according to S&P Global.

AGSI figures cited by CT 24 suggest the Damborice reservoir, described as Czech Republic's newest gas reservoir, currently holds around 36% of its full storage capacity. That is far lower than other Czech storage operators, such as RWE, which currently has around 90% in its banks.

Gazprom has a 15 year-lease on the Moravia gas storage, having paid 7.5bn koruna for the tenure to Moravske naftove doly. The lease agreement required a special exemption as it was awarded without a competitive tender, and saw Prague locked in a protracted dispute with the European Commission.

Russian suppliers including Gazprom provide around 87% of Czech gas supply, estimated at around 8-9 bn m3 yr annually, according to figures from the Czech statistics board.