French government to clarify gas storage obligations

03 July 2017 13:57 Source:ICIS

The French energy ministry wants to clarify a law governing natural gas storage, which would allow suppliers to use gas stored outside of the country and in LNG terminals to fulfil their storage obligations.

The energy ministry has prepared a ministerial order outlining the proposed changes – known as an arrete – which it has sent to the Conseil Superieur de l’Energie (CSE), a public energy advisory body, for examination on 6 July.

If approved by the CSE, the order should be passed into law quickly. However, at this stage it seems unlikely the changes will be enforced during the current storage cycle. It is more likely they will be introduced for the next storage season, beginning April 2018.

Non-national storage

The clarification could have significant ramifications for France’s gas storage sector. Shippers consider the current law to be woolly and open to interpretation.

The proposed clarifications will cement the rules around suppliers’ storage obligations, and allow them to use gas held in storage sites in other EU-member states, as well as in French and EU LNG terminals to fulfil their obligations.

The French government imposes strict storage obligations on suppliers as a means to ensure security of supply and cover peak winter gas demand. Companies are required to hold a certain amount of gas in store at particular times depending on the make-up of their end-user portfolio.

The move is unlikely to be popular with France’s two storage operators, Storengy and TIGF, as it could provide a disincentive for shippers to book storage capacity within France.

The new rules may also influence the outcome of the court case between French gas association Uprigaz, Italian energy giant Eni and the French energy ministry (click here to see the story).

Uprigaz, whose members include key suppliers Dalkia, Statoil and Total, have said the French rules are burdensome and the system is uncompetitive compared to EU member states.

They have argued the increasing interconnectedness of the European gas network, as well as growing LNG deliveries, means national storage now plays a less important role in supply security.

By Alex Thackrah