EU says energy supply is not immediately threatened but seeks to increase its supply

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Flags of the European Union fly in front of the headquarters of the European Commission in Brussels, Belgium on July 14, 2021. REUTERS / Yves Herman

  • Commission working with other gas producing countries
  • ENTSOG says cold winter would need 5-10% increase in gas imports
  • Commission asks ACER to review wholesale market model

LONDON / BRUSSELS, October 13 (Reuters) – Europe’s energy supply is not immediately threatened despite low levels of gas storage before winter, but the European Commission is working with other gas-producing countries to increase supply, the EU executive said on Wednesday.

European gas and electricity prices have increased this year as demand for energy around the world has increased as part of the economic recovery from the coronavirus pandemic.

The region has had to compete with Asia for liquefied natural gas, where demand is also high, amid low levels of storage, infrastructure failures and below-normal supply from Russia.

The European Commission outlined measures the EU could use to tackle soaring energy prices, and said it would explore the possible benefits of joint purchase of gas between countries as a means of amortizing price spikes. Read more

“Although energy price fluctuations have occurred in the past, the current situation is exceptional as European households and businesses face the prospect of rising energy bills at a time when many have been affected by loss of income due to the pandemic, “the Commission said in a communication on energy prices.

The current level of gas storage in Europe is below normal, at just over 75% full, compared to an average of 90% at this time over the past 10 years, the Commission said.

That would be sufficient in a winter similar to the previous one, but the weather will be a variable to watch, he added.

The Commission said it was working with the European Network of Transmission System Operators for Gas (ENTSOG) to monitor security of supply.

ENTSOG’s latest winter supply outlook revealed that the European gas infrastructure of storage and distribution systems offers sufficient flexibility to cope with high demand during an extremely cold winter.

However, a cold winter would require an increase in gas imports from pipelines or liquefied natural gas (LNG) by about 5% to 10% from previously observed peak levels, ENTSOG said.

The Commission said it was working to find additional supply.

“We are contacting our business partners to discuss the possibility of increasing their deliveries to the market,” said EU Energy Commissioner Kadri Simson.

Wholesale gas prices are expected to remain high during the winter months and fall from April 2022, albeit to levels still above the average for previous years, the Commission said.

Some EU members questioned whether the wholesale market model was still appropriate. Since the price spikes are due to global conditions, the Commission considered that alternative market models were unlikely to produce better results.

However, he asked the Agency for European Energy Regulators (ACER) to examine the pros and cons of the current market model and its implementation by member states.

The Commission wants ACER to come up with recommendations by April next year.

Reporting by Nina Chestney in London, Nora Buli in Oslo and Kate Abnett in Brussels; written by Nina Chestney; edited by Elaine Hardcastle

Our standards: Thomson Reuters Trust Principles.


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