(EurActiv) — Drawing lessons from this year’s cold snap, the Russian export monopoly Gazprom has announced it will double its underground gas storage capacity in Europe, raising concerns that it might abuse its dominant position.
Russia has maintained stable deliveries to European customers despite “abnormally cold weather conditions in Russia and in Europe,” said Alexander Medvedev, deputy chairman of Gazprom’s management committee and director general of Gazprom Export. This was largely due to new underground gas storage facilities, or UGSF, he said.
During the peak demand period, Gazprom has been extracting natural gas from storage facilities located in Europe at the maximum rate – more than 38 million cubic meters per day.
In Austria, Russian gas is stored in the Haidach UGSF, where a recently completed second phase doubled capacity. In Germany, Gazprom relies on the Rehden and the Katharina underground facilities, the latter went on stream this season. In Serbia, the Banatski Dvor UGSF was also opened this winter and has already reached the designed output capacity of more than 4 million cubic meters per day.
In order to guarantee the security of Russian gas exports to Europe, Gazprom aims to ramp up its underground gas storage to about 5 billion cubic meters by 2015, nearly doubling its capacity, Medvedev said.
Gazprom’s strategy aims at creating a network of warehouses close to end consumers and the main export routes and has been proved “effective and intelligent,” Medvedev said.
“We would like to believe that European regulatory bodies would take this rationale into account.”
‘Important, but not exclusive element’
Asked to comment, the European Commission recognised that underground gas storage had played “a crucial role” in ensuring the EU’s security of supply during more a two-week cold snap blamed for the deaths of some 600 people across Europe.
But other measures were equally important, the Commission said, citing liquefied gas terminals, greater flexibility in commercial contracts, the ability to reverse gas flows in pipelines as well as Europe’s push to diversify its portfolio of gas imports.
“One of the lessons learned in the latest period of extreme high gas demand is that free flow of gas among member states and the elimination of contractual and physical congestion is the basis of security of supply. Therefore storage [facilities] are an important but not an exclusive element to provide gas to consumers,” a Commission spokesperson said.
According to the EU executive, the storage capacity constructed in recent years is a clear indication of the interest of market participants in this segment.
Member countries to prevent monopoly abuse
But the Commission warned that gas warehousing can also seriously distort the market. In order to ensure that storage capacity is used efficiently and does not impose unreasonable costs on consumers, all provisions of the EU legislation must be respected, in particular the third party access to gas storage facilities.
“It is the responsibility of the member state in which the production is located to ensure that the use of storage for production operations is not abused by producers, through the creation of de facto priority access to storage,” the Commission says in this document, which is not legally binding.
There are no obligatory rules on gas storage in the EU. The “supply standard” in the so-called SOS Regulation (Security of gas regulation) obliges suppliers to be able to provide gas to protected customers in certain conditions for 30 days in case of the disruption of the single largest gas infrastructure under average winter conditions.
However, the regulation does not specify how they should meet this obligation. This can therefore be done via underground storage, LNG solutions or other means.