GSE statement on the role of commercial storage in times of supply disruption

Date

04 Feb 2009

Gas Storage Europe (GSE) would like to highlight the critical role commercial storage played in the response to the recent gas crisis in Europe. The extraordinary situation which Europe witnessed, as a result of the Russia-Ukraine gas dispute, aggravated by cold winter weather, saw Europe’s storage operators deliver significant volumes of commercial gas stocks as the main mitigation measure.
As evidenced by the GSE aggregated gas storage inventory scheme (http://transparency.gie.eu.com ) commercial gas stocks were drawn down by around 15% across Europe from week commencing 5th January 2009 to the start of the gas day on the 19th January 2009. During previous Q1 periods average draw down of stocks is 2.5% per week. Stored gas has moved across country borders, reinforcing the important role commercial storage plays in the functioning of both the internal and regional gas markets. Importantly all gas consumers have so far been supplied from commercial gas stocks and no gas has been drawn down from strategic gas stocks. Where strategic storage provisions have been made and authorised for usage, these stocks have remained in store with more commercial stored gas being withdrawn to supply the market.
Whilst acknowledging the important role played by commercial storage in mitigating supply disruption, it should also be recognised that storage will always have a finite duration of stock and deliverability per day. GSE believe that existing and new commercial storage is critical to guaranteeing security of supply, working alongside additional gas supply routes and LNG re-gasification facilities to secure energy supply within Member States.
GSE remains an advocate for the development of additional commercial storage capacity within the EU gas network to increase storage duration and help dampen supply disruption. Commercial storage should ideally be located close to centres of gas demand (where geologically feasible) and we continue to stress that obligatory strategic stocks do not provide an optimum solution to mitigating supply disruption. Strategic storage is expensive in absolute and relative terms and undermines the incentive for investment in existing and new commercial storage facilities. In effect more strategic storage will lead to less investment in commercial storage, leading to a need for even more strategic storage thus creating a vicious circle. GSE has published a position paper providing more insight on the matter in 2008; the paper is available on the GIE website.
Additionally, we note the encouraging figures previously published by GSE relating to planned commercial storage projects, whereby around 60 bcm of additional storage capacity could be delivered by 2015 – almost doubling existing EU storage capability. The current situation highlights the requirement for a stable regulatory framework based on market-mechanisms, allowing storage developers the opportunity to deliver these challenging projects and further assisting security of supply throughout Member States.
Note to Editors
Gas Storage Europe (GSE) represents the interests of 33 Storage System Operators with around 110 storage sites in 16 countries in Europe, representing approximately 85% of EU technical storage capacity. GSE is one column of GIE, Gas Infrastructure Europe, the European association of the Transmission, Storage and LNG terminal Operators. GSE is committed to improving the regulatory and investment framework for storage activities in order to help its members to continue providing secure, efficient and valuable storage services to the market.
GSE European Storage Investment Database collects both GSE and non-GSE public information on storage projects in Europe. It has been first launched on 5 July 2007.
For more information please contact:
GIE Secretariat gie@gie.eu
Mylène Poitou +32 2 209 05 03
Website www.gie.eu

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