EU to Propose Extending Cuts in Gas Demand Until Next Year

By Bloomberg

Mar 09, 2023

image is BloomburgMedia_RR8ZNHT0G1KW01_09-03-2023_11-00-05_638139168000000000.jpg

Vapor rises from a cooling tower at the Golfech Nuclear Power Plant, operated by Electricite de France SA (EDF), on the Canal de Golfech in Golfech, France, on Monday, Feb. 27, 2023. Europe's largest fleet of nuclear reactors in France and their ability to rebound from a spell of prolonged outages and maintenance is key to the region diversifying its energy supplies in the absence of Russian supplies. Photographer: Matthieu Rondel/Bloomberg

(Bloomberg) -- The European Commission will propose extending emergency gas demand reduction measures until next year to ensure it is well prepared for the coming winter, energy chief Kadri Simson said

The current voluntary target to cut consumption by 15% is set to end this month, and prolonging it is necessary to ensure enough supply for the next heating season, Simson told lawmakers Thursday. The European Union managed to reduce demand by nearly 20% over this winter.

“It’s the best guarantee to achieve another great level of storage by November,” Simson said. “This year will be challenging, and the year after that as well. Many uncertainties remain.”

The bloc is targeting to fill its storage sites to 90% before next winter, with both the EU and the International Energy Agency highlighting potential shortages of liquefied natural gas should Chinese demand recover. The bloc passed a number of emergency measures last year, including a gas price cap. It is also planning to issue a tender next month for joint gas purchases, with contracts expected to be signed in June.

The market will closely watch the rate of replenishing storage sites over the summer, especially without the usual Russian volumes. Moscow sharply lowered shipments through pipelines following the war in Ukraine, and much of Europe is looking to move away from those supplies. However, Russian LNG imports into Europe have increased.

Simson called for a stop to these shipments as well, without announcing any specific measures. European companies should not renew long-term contracts with Russia once current ones end, she said. The EU received around 20 billion cubic meters of LNG from the country last year.

“We can and should get rid of Russian LNG completely, as soon as possible, still keeping in mind our security of supply,” Simson said. “Committing not to renew existing contracts with Russia is the best way to give a long-term assurance to our reliable partners that meaningful demand will stay.”

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By John Ainger