Czech gas storage facilities face new rules: minimum filling levels and certification

The proposed EU regulation on gas storage envisages filling facilities to 80% by 1 November this year. From next year, this should rise to as much as 90%. The targets are to be binding on Member States and may mean additional obligations for gas suppliers, such as storing a certain volume of gas in storage facilities. 

Following the outbreak of the war in Ukraine, the European Commission almost immediately announced its intention to introduce new rules for the gas market, particularly with regard to ensuring security of supply. The first draft regulation concerning gas storage facilities was published at the end of March and will naturally also affect gas storage facilities in the Czech Republic.

The proposed regulation primarily concerns the obligation to ensure that storage facilities are filled before the winter period, with interim targets also set. In view of the current situation, the European Commission has set targets already for this year: storage facilities should be 80% full on 1 November this year. From next year and every year thereafter, they should be 90% full.

To prevent a situation in which storage facilities are not filled before the winter season, interim targets have also been set – for 2022 in August, September and October, and in subsequent years in February, May, July and September.

A comparison of historical data shows that since 2011, the conditions set by the regulation for this year would have been unmet in only five cases. However, this applies under relatively normal conditions. It should be added that after this winter, storage facilities are at their second-lowest level in the past 10 years. Achieving this year's targets may therefore not be easy given the current situation.

Another negative factor is the current high price of natural gas and the risk that natural gas prices will be lower during the winter. The incentive to store gas is therefore low, as it could simply be a loss-making business.

The European Commission's proposal also sets out options through which each Member State can encourage market participants to store gas. These include an obligation on gas traders to store a minimum volume of natural gas in storage facilities. Such an obligation already exists (the so-called security of supply standard), and there is even a proposal to increase it. However, at a time of high prices, such a measure is not very popular among gas traders.

An alternative may be the introduction of incentives or compensation intended to offset potential losses arising, for example, from storing a minimum volume of gas in storage facilities.

Gas storage operators face so-called "certification"

The European Commission also wants to focus on the owners of companies operating gas storage facilities following poor experience. Among other things, it is responding to a situation in which gas storage facilities operated by Gazprom or with its involvement were drawn down more than expected at the end of this winter.

Every gas storage operator will have to undergo so-called certification, similar to that required of transmission system operators in every Member State. The assessment will primarily verify whether the ownership structure of the storage operator or its other commercial relationships could pose a risk to security of gas supply in the European Union.

In an extreme case, where an operator is not certified, it may be decided that the owner must divest its stake in the gas storage facility. At the same time, the regulatory authority should decide on appropriate compensation.