Page 4 - FSUOGM Week 49 2021

FSUOGM COMMENTARY FSUOGM

EC backs strategic gas storage

reserve to hedge against future

gas shortages

The commission is reluctant to place too much focus on the reserve, however,
because it expects to transition away from gas over the coming decades

EUROPE EUROPE will create its own strategic gas reserves The gas crisis remains concentrated amongst
in order to hedge against future gas shortages, the northern EU member states that have been
European Energy Commissioner Kadri Simson faster to adopt the energy reforms and move to
said at a press conference on December 3. buying on the spot market; many of the south-
The EU Council made the decision at a meet- ern states have kept their long-term contracts
ing at the energy minister level, reports Neft i with Gazprom and as such, have been better
Kapital. Simson stated that the EC is working protected from the spike in prices. The advent of
on a package of proposals to regulate the natural TurkStream, which went online in January, has
gas and hydrogen markets. She also added that, also served to insulate those states along its route
despite the extremely high prices of natural gas from the price shock.
in 2021, hub-linked gas prices will deliver gas And the gas crisis is not over. While Russia’s
European energy more cheaply to the Continent over time than national gas giant Gazprom has been producing
commissioner Kadri long-term oil-linked prices. at 1.5bcm per day – close to its maximum capac-
Simson. Since most of northern Europe abandoned ity – and has increased exports by some 10% year
long-term contracts and bought gas on the on year, it is not selling enough gas to meet mar-
spot market, following the introduction of the ket demand.
so-called third energy package, EU members Because of the V-shaped market of the last
have saved and estimated $70bn on their gas two years, there has been a perfect storm of
purchases. But as NewsBase.com reported, the coincidences that have combined to cause a
EU has given up almost all those gains in the crunch in supplies on the European gas mar-
current gas crisis after prices on the spot mar- ket. The upshot is Europe went into this win-
ket soared to briefly touch $2,000 per thousand ter with the lowest level of storage in a decade
cubic metres this autumn – as much as ten times at 77% at its peak in October, but as this
higher than the average gas prices on the spot November has been the coldest in the last five
market. years, those stored supplies of gas are already

P4 www. NEWSBASE .com Week 49 08•December•2021