LNG

The head of the German energy regulator BNetzA, Klaus Müller, disagrees with the proposal of the European Union to extend gas storage target until 2027. The mandated 90% filling level of storages by November seens to distort seasonal pricing pattern while a build-out in LNG import infrastructure offers alternatives to gas storage.

Since late 2024, gas prices for summer delivery have been trading at a premium to winter – a reversal of typical seasonal pricing. Critics blame this on the mandatory storage goals, arguing they reduce market flexibility and are skewing market signals.

Speculative long positions at the Dutch TTF gas trading hub have increased recently, fuelling concerns that traders are betting on government support for storage refills.

BNetzA President Müller find this trend worrying: “It makes me nervous. It doesn’t inspire confidence that everyone is acting responsibly,” he said, arguing the EU storage goal incentives are misaligned, costly and distort the behaviour of free markets.

The EU had introduced the 90% gas storage filling mandates prior to the winter season in 2022 when Russian gas imports collapsed, but critics say the rules are no longer adapt to today’s market dynamics. As Germany’s coalition talks continue, Müller wants to raise the issue directly with the country’s next energy minister.

EU Regulators uphold storage mandates

Over in Brussels, policymakers have a different view: Amending EU Regulation, published on Wednesday last week, proposes to extend the gas storage requirements by another two years, arguing this would be needed to deliver on the REPowerEU plan which focusses on expanding underground storage capacity of gas, upgrading and extending LNG infrastructure; and diversifying both sources and routes of pipeline gas.

"To deliver on these objectives, the extension of some of the measures, mainly the November gas storage filling target, adopted previously for a limited period of time, is necessary," the regulatory document reads.

Gas-storage facilities provide for 30% of the Union’s gas consumption during the winter months, and EU policymakers are convinced the 90% filling rate is a “necessary and appropriate level" to ensure security of supply.

“The European gas market remains tight. The competition for global LNG supplies has increased and exposure to price volatility is stronger than before.”

“The gas price development during the 2024/2025 winter may confirm the trend,” EU policymakers argue, underlining: “In such situation, the role of gas storages remains paramount.”

The German Federal Network Agency, the Bundesnetzagentur (BNetzA), has exempted Deutsche ReGas GmbH and its LNG import terminal project, Deutsche Ostsee, at the Baltic port of Lubmin from tariff and network access regulations.