Here are the true effects of filling gas storage in 2022
Were Snam's purchases to fill gas storage in 2022, the year of the serious European energy crisis, a mistake ? No. Here's why
Was there really a " hole " in the accounts – as we hear repeated in some media these days – caused by Italian gas purchases?
Did responding to the energy emergency of spring-summer 2022, when without Russian gas and with storage at an all-time low, Italy (and Europe) had to purchase gas on turbulent and speculative markets, really cost that much?
Around 4 billion euros were spent, but if you think about Germany – the 200 billion allocated by the Scholz government and the rescue of Uniper , that is – the perspective needs to be at least revised.
Furthermore, the measure proposed by Arera, the so-called " neutrality charge ", follows the similar countermeasure adopted by the German government (which also decided to apply it to outgoing gas, shifting part of the burden onto cross-border buyers as well) .
But to better understand what happened it would be best to try to summarize some points.
FILLING OF STORAGE: THE CONTEXT
First of all, the decision to fill gas storage was made at European level by the Security of Supply Regulation , which all member states are required to comply with.
Furthermore, commercial operators – i.e. companies that buy and sell gas – have considered the filling of storage unsustainable due to the high level of purchase prices of the raw material which cannot subsequently be contracted with forward sales, due to the absence of a demand at such high prices.
The initiatives taken by the institutions to incentivize commercial operators to purchase gas to put it into storage (such as storage bonuses and zero-based auctions) have not allowed the minimum filling obligations established by the legislation to be achieved. Consequently, the national system found itself exposed to a high risk of failure to cover energy demand.
At this point, operators such as Snam (and the GSE) have been called to intervene in a residual and complementary manner – insiders point out – to fill the difference between the levels of stocks supplied by commercial operators and the quantities set out by the regulation European Union on security of supply.
WAS THE GAS REALLY PURCHASED “AT ANY PRICE”?
The purchases made by Snam did not take place at "any price", as critics of the government measure claim, but rather at prices in line with the spot prices of the Italian PSV (the Virtual Trading Point for natural gas), in turn aligned with those of the main European gas exchanges.
As already explained on Startmag , the filling of the storages guaranteed the physical availability of the gas and "had significant price stabilization effects, which from December 2022, once the stocks were reconstituted, returned below 100 euros/MWh, dropping to 30 euro/MWh during the last summer filling of 2023. Having purchased approximately 3 billion cubic meters of gas, in short, had a price-calming effect on the entire national gas system and on all household demand and businesses equal to approximately 68 billion cubic metres".
THE EXTRAORDINARY SITUATION OF 2022
Even before the outbreak of the war between Russia and Ukraine, however, European gas prices were still high (around 180 euros per megawatt hour ) due to Russia's already reduced exports to the Old Continent and the low levels of storage , which were not sufficient to cover winter demand.
The further increase in gas prices in the summer of 2022 – several months after the start of the invasion – is mainly attributable to the even more limited supplies from Russia, which in 2021 had represented around 40 percent of the country's total imports. 'European Union. In the absence or near absence of Russian gas, it was legitimate to fear that the reserves would not be filled in view of the following cold season.
The storage filling plans must be inserted into this extraordinary context. And the purchase of approximately 3 billion cubic meters of gas had a calming effect on the entire national gas system and on all demand from families and businesses, equal to approximately 68 billion cubic meters last year.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/riempimento-stoccaggi-gas-contesto/ on Wed, 20 Dec 2023 10:30:43 +0000.