Dutch gas storages might be set to miss their Feb. 1 interim filling target

Dutch gas storage levels could drop below the interim 47% fullness target set by the European Commission for Feb. 1 if they follow historical withdrawal rates and the current rates of withdrawals, data from Gas Infrastructure Europe showed.

Data from GIE showed that if net withdrawals remained at the average of 850 GWh/d observed from Jan. 1-12, the country would fall below the 47% filling storage target set by the EC for Feb. 1, on Jan. 17.

Alternatively, if the country returned to the average net withdrawals of 602 GWh/d recorded between Oct. 1 and Jan. 14, or the average observed between Oct. 1 and Jan. 31 during the periods from 2019 to 2024, it would dip below the 47% mark on Jan. 18 and Jan. 19, respectively.

This came after the Dutch government said in a statement on Jan. 14 that it was keeping a "close eye" on the country's storages but iterated that, despite the strong withdrawal rates, that there was no threat on the security of supply. The government said it expected there to be "enough gas this winter."

Under EU rules on gas storage, filling levels that are up to five percentage points below the target are considered to comply with the targets of the regulation.

A 42% filling rate for Dutch storages will be breached on Jan. 25 with the average net withdrawals recorded between Jan. 1-12, on Jan. 29 with the Oct. 1-Jan. 12 rate and Feb. 7 with the average net withdrawal rate observed between Oct. 1 and Jan. 31 during the periods from 2019 to 2024.

If the filling level of a member state is more than five percentage points below the level of its filling trajectory, measures should be taken to increase it, according to the storage regulation.

However, it remained unclear what would be the measures taken on countries missing the storage filling target set by the EC.

"The Netherlands dropping below 47% before Feb. 1, will dictate how serious this new regulation is," a UK-based trader said.

"Last year, Denmark didn't fulfil their obligation, and nothing happened, though Danish storages are small compared to the Netherlands which is still a significant storage player in Europe. So will they get some kind of enforcement?," a Switzerland-based trader said.

Denmark missed its storage filling target ahead of the last Nov. 1 deadline and remained in talks with the EC on the factors that caused it and potential actions required to remedy the situation.

With current price spreads not incentivizing summer injections, it remains to be seen whether member states will meet their targets this year or whether they might instead accept whatever EU measures are imposed for missing them.

France, which has also seen an increase in withdrawals since the start of the Jan. 13 week, might see its storages fall below the unchanged target of 41% before the Feb. 1 deadline, if the current withdrawal rate persists.

If the average net withdrawal rate of 919 GWh/d observed between Jan. 1-14 persists, French storage will fall below 41% of its filling capacity on Jan. 28. However, if the country returns to the average net withdrawal rate recorded between Oct. 1 and Jan. 12, this date will be pushed to Feb. 7. If the average from the Oct. 1-Jan. 31 periods between 2019 and 2024 is considered, the breach will occur on Feb. 10.

France had the longest filling curve of major European gas systems, a Danish trader said, adding that the lack of flexibility in withdrawals/injection volumes in the country needed a steady rate of withdrawals/injections.

Platts, part of S&P Global Commodity Insights, last assessed the French PEG day-ahead contract at Eur46.78/MWh on Jan. 15, a 49.50 euro cent/MWh discount to the TTF, valued at Eur47.275/MWh.

"I´d like to see more LNG arrivals, less consumption, and less storage withdrawals to state PEG/TTF is finally bearish," a European gas trader said.

However, a UK-based trader said that while "the French storages are low they have stable send out and are on their normal track."

Another portfolio manager based in France added that the French network remained long despite strong consumption levels.

Nonetheless, this trend of strong storage withdrawals has been observed across the EU this year, as a tight LNG market and colder weather runs have pushed net withdrawals near the winter 2017-2021 five-year-average, with the expectation of less gas in store ultimately supporting prices on the front curve and summer 2025 products.

"These storage targets will define market sentiment over 2025... If people start stressing over there not being enough gas, then they will start pushing the prices higher," a Germany-based portfolio manager said. "Ending winter with under 20%, this is risky.... anything between 20%-30% falls within expectations, and above 30% is good.... The storage targets set by the EC may mean forced buying of gas, which means boosted prices, which I think is counterintuitive to what the EU wants to achieve."

Platts lastly assessed the summer 2025 contract of the Dutch TTF at a Eur2.55/MWh premium to its winter-ahead counterpart on Jan.15. A year earlier, the summer 2024 contract was assessed at a Eur4.15/MWh discount to the Winter 2024 instrument.

A CEE gas source conceded that that storages in Europe had enough in stock to last for the winter, but noted that regardless of regulatory incentives, it was the summer-winter spread that would be the deciding factor for market participants on whether to inject or not.

As German flows to the landlocked Central and Eastern European nations increased following the end of the Russia-Ukraine transit, market sources in CEE believed that this increase in German exports to the region will not substantially erode the German storage levels, unless a protracted cold spell prompted prolonged and large withdrawals from the CEE countries' gas storages.