European Union gas industry lobby groups are urging Brussels to relax gas storage refill targets amid the supply crunch prompted by the war in the Middle East.
The EU has a refill target of 90% of storage capacity by November every year in a bid to secure sufficient supply for peak demand season in winter. The war, however, has removed a solid portion of global LNG supply, making the refilling job harder and more expensive.
As a result, the International Association of Oil & Gas Producers and Eurogas have asked for more flexibility. “To maximize price relief, flexibilities should be activated by the commission and member states as soon as possible, early in the storage season,” the organizations said in a statement today, as quoted by Bloomberg. The statement comes ahead of an informal meeting of EU energy ministers in Cyprus to discuss the state of energy supply in the bloc.
There is already some flexibility in the gas storage refill mandates: member states are allowed a deviation from the 90% target of 10 percentage points plus another 5 percentage points if market conditions are especially challenging—which they certainly are right now.
The gas industry lobby also noted in its statement that the EU’s emergency action with regard to energy supply security should remain temporary, targeted, and proportionate, Bloomberg said in its report.
“Initiatives such as demand aggregation or diversification approaches should remain voluntary in nature and must not distort wholesale price signals,” the IAOGP and Eurogas said. “Clear and credible price signals are indispensable to attract natural gas, and crude oil supplies in global markets, particularly in a tightening market characterized by intense competition for LNG cargoes, including by Asian buyers.”
The EU’s remaining gas in storage sits at 35.57% of capacity, which is much lower than it has been over the past five years.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- US Crude Inventories Fall But Gasoline Stocks See Surprise Build
- Morgan Stanley: Oil Buffers Could Run Out Before Hormuz Reopens
- Japan Receives First Central Asian Crude Since Iran War Began
