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Dutch gas reserves will not reach the level deemed necessary to withstand an exceptionally cold winter because market conditions have made stockpiling unprofitable, Gasunie has warned.
“Based on the latest developments, the Netherlands will no longer achieve the previously set filling target for this winter (115 TWh) — which is approximately half of the Netherlands’ gas consumption,” the company said in a statement.
The 115 TWh national target is higher than the Netherlands’ EU requirement of 74% of storage capacity. The NL Times reported that both targets were now out of reach.
The national targets are based on the gas threshold needed to cope with the harshest winter of the past 30 years. Gasunie said missing it did not automatically mean there would be insufficient gas this winter or that supplies were at risk. However, “without additional policy measures, the Netherlands is insufficiently prepared for a scenario involving one of the harshest winters,” said the firm.
Summer gas prices are higher than expected winter prices, making it unprofitable for energy companies to buy gas now and store it for sale during the winter.
European gas prices were trading near €64 per megawatt-hour (MWh) on Wednesday, more than double their level at the beginning of the year. Prices have risen sharply in recent days, fuelled by concerns that the Strait of Hormuz could remain closed into the winter.
On Wednesday, however, reports of progress in Middle East talks eased supply concerns. Risks remain as the blockade of the Strait of Hormuz continues to delay Qatari liquefied natural gas (LNG) shipments.
Referring to the geopolitical situation, the company said, “We are currently assessing how we can maintain the gas supply as robustly as possible in these changed geopolitical and market conditions and prevent unnecessary pressure on the gas market and, consequently, on prices”.
Hot weather has added a separate strain, with record summer heatwaves pushing up electricity demand for air conditioning, while the same heat and drought curbed output from hydropower and nuclear plants.
Hot weather has added pressure to the European gas market by raising electricity demand for air conditioning, while heat and drought have constrained some hydroelectric and nuclear generation. This can increase demand from gas-fired power stations, potentially leaving less gas available for storage.
How full are Dutch gas storage facilities?
Dutch storage facilities were 44.26% full on 23 August, compared with the national target of roughly 80% by 1 November. This was the lowest fill level among the EU countries for which data were available that day.
A spokesperson for the Dutch Ministry of Climate and Green Growth told Euronews Business that across Europe, companies are filling gas storage facilities only to a limited extent because it is currently not economically viable to do so. “The European Commission has therefore previously advised Member States to lower the (EU) filling targets to prevent gas prices from being driven up unnecessarily,” they said.
The Dutch government has authorised state-owned Energie Beheer Nederland (EBN) to store up to 80 TWh of gas when commercial companies fall short, a programme that the ministry said was on schedule.
Gasunie confirmed that EBN was carrying out its role properly, but said that storage facilities were still filling too slowly. It had previously raised these concerns with the ministry.
The company said it would continue to monitor developments and keep the ministry informed, but stressed that decisions on further support rested with the government. “Ultimately, it is up to the Minister to make policy decisions based on the advice received and current developments.”
Nevertheless, the ministry said it was not expecting a shortage: “The government is confident that there will be sufficient gas for the winter and continues to monitor the situation closely.”
The government will write to the House of Representatives in September with an update on the situation and its assessment of possible next steps.