Behind the scenes, government officials and industry lobbyists warn countries could rush to meet those targets all at once if the rules aren’t loosened, driving up demand and allowing traders to exploit soaring prices.
That’s the dynamic that caused traders to bid up gas prices to over €300 per megawatt hour in 2022, with the lofty new storage targets compounding the sharp rise in demand that followed Russia’s supply cuts.
Analysts say the difficulty in restocking those reserves will also be made more difficult by stiff competition from Asia, which is more directly exposed than Europe to the gas shipments that once flowed through the Persian Gulf. That could lead to higher mid-year gas prices, undercutting the incentive for traders to sell in the winter and store in the spring and summer.
Officials stress it’s still early days. But already, multiple European governments have considered invoking existing carve-outs that allow them to relax storage targets in order to reduce the scope for bulk buying, according to three European energy officials familiar with the matter.
Meanwhile, at least three countries believe the EU executive should introduce flexibilities beyond the existing framework, including lowering the target by as much as 30 percent, two of the officials said. The countries also sought a new EU mechanism to coordinate gas purchases, they added.
Such policies would allow countries to fill up for the coming winter more comfortably. “With a lower target we would not be driving the demand for very high storage level filling, [and] driving the prices up,” said one of the people.
