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EU wants natural gas storage topped up to curb reliance on Russia

EU leaders have already vowed to wean the bloc off its dependence on Russian energy by 2027, but tangible measures still have to be put in place

natural gas pipeline

Increased gas storage should help alleviate dependency. Currently, up to 30 per cent of consumption during a winter comes from storage

AP Brussels
The European Union's executive arm on Wednesday proposed that all natural gas storage facilities in the 27-nation bloc be topped up to at least 80 per cent capacity for next winter as it sought to reduce its reliance on Russian energy in the future.
On the eve of a two-day summit of EU leaders, the European Commission said the bloc must quickly revamp its energy policy before next winter and that another price crisis will leave millions of EU citizens with bills they cannot pay.
However, energy experts say filling reserves when the natural gas market is tight will mean higher prices for consumers.
EU leaders have already vowed to wean the bloc off its dependence on Russian energy by 2027, but tangible measures still have to be put in place.
On top of mandatory high storage levels, the commission also wants EU nations to agree to the joint purchase of natural gas and liquefied natural gas that will be similar to its system of buying COVID-19 vaccines in huge quantities for equitable distribution.
The draft conclusions of the summit obtained by The Associated Press include that with a view to next winter, Member States and the Commission will urgently ... work together on the joint purchase of gas, LNG and hydrogen.
The details of such a deal would still need to be worked out.
The EU imports 90 per cent of the natural gas used to generate electricity, heat homes and supply industry, with Russia supplying almost 40 per cent of EU gas and a quarter of its oil.
Increased gas storage should help alleviate dependency. Currently, up to 30 per cent of consumption during a winter comes from storage.
After demanding a level of 80 per cent capacity this year, the commission wants it to go to 90 per cent next year.
To ensure the storage facilities could not be controlled by foreign interests that could manipulate prices and volume, the commission wants there to be a certification system to address essential security interests.
In Germany, for example, Russia's Gazprom owns several storage facilities.
The German government is in the process of passing a law requiring the storage facilities to be filled to capacity by the winter to prevent any manipulation with storage volumes.
To deal with runaway energy prices, several nations are looking at imposing price caps on gas, saying the market conditions have become unhinged from reality, but Germany and the Netherlands have raised objections, fearing suppliers would simply sell elsewhere.
I say this quite openly, German Chancellor Olaf Scholz told the German parliament, "there will be no removal of market mechanisms or permanent subsidies, particularly for fossil fuels. This would not be fiscally sustainable, and ecologically it would give the completely wrong incentives.
On the eve of the summit however, a high-level French official who spoke on condition of anonymity in line with government policy said Paris considered it an option we are looking into with interest.
In its communication, the commission said such capping can give an important signal that the EU will not pay any price for gas but such an intervention should only be envisaged as last resort, as it entails some drawbacks in terms of security of supply of gas flows.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Mar 23 2022 | 9:10 PM IST

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