Key facts
- The Netherlands is pushing to scrap the EU's mandatory gas storage targets.
- The Dutch government spent nearly 1 billion euros ($1.14 billion) this summer on gas inventories.
- The Netherlands argues current EU rules consider storage capacity rather than consumption.
- High natural gas prices have made filling reserves expensive.
- Germany's gas storage was at a historically low 57% full as of September 24.
- Germany is considering expanding market incentives to boost gas storage levels.
The Netherlands is advocating for the abolition of the European Union's mandatory gas storage targets, citing their inadequacy and the significant financial burden they place on member states. Climate Minister Stientje van Veldhoven communicated this position to Parliament, noting that the country has already spent approximately 1 billion euros ($1.14 billion) this summer season alone to build up gas inventories, a responsibility that should primarily rest with market participants.
The Dutch government argues that the current EU regulations prioritize storage capacity over actual gas consumption, a system they deem flawed. This past spring-summer filling season has been particularly costly for EU member states due to soaring natural gas prices, exacerbated by geopolitical tensions and supply concerns related to the Strait of Hormuz. This price spike has deepened the backwardation in European gas markets, where prompt contracts trade at a premium to future ones, signaling immediate supply worries and discouraging long-term storage.
Evidence suggests Europe may face challenges securing sufficient supply for the upcoming winter. The Netherlands has already indicated it will miss its target for filling natural gas storage sites. Germany, the EU's largest economy, is exploring ways to incentivize traders to increase storage levels, including expanding market tools like the Long Term Options tender. Despite possessing the world's fourth-largest gas storage capacity, Germany's storage sites were only 57% full as of September 24, a historically low level that, according to the country's gas storage association INES, risks shortages if the winter proves harsh.