EU member states should consider how to avoid inverted seasonal spreads once again leading to a strong rise in EU gas prices, Austrian utility Verbund's chief executive Michael Strugl has told Argus.
Managing summer injections will partly depend on end-of-winter stocks, Strugl said. EU legislation requires the bloc to fill at least 90pc of its storage capacity by 1 November, so all of Europe might need to buy gas to refill stocks after a cold winter, especially without Ukraine allowing the transit of Russian gas, he said. This move to buy could drive up prices, depending on hub liquidity, he said, adding that governments should "consider carefully what a wise and prudent approach could be" to avoid market reactions like in 2022.
From late February 2022 after Russia invaded Ukraine, the TTF summer 2022 price rose above the winter 2022-23 contract, reaching a premium of €59.66/MWh on 8 March 2022.
A substantial reduction in Russian flows to Europe sparked fears about the stockfill, leading to "incredible heights in gas prices paid by consumers and states", Strugl said. But Europe has since taken manifold precautions to avoid repeating that situation, including joint gas purchasing, he said.
Austria's 20TWh state reserve and high ratio of storage capacity to demand can help ensure the country's supply in winter 2025-26, Strugl said. Austria [also imposes a storage obligation on firms with end consumers](https://direct.argusmedia.com/newsandanalysis/article/2466400), with the amount determined by whether they can prove their supply is of non-Russian origin.
European gas flows changed substantially after 2022, leaving Austria well prepared for imports from other routes, Strugl said. And Austria had prepared for the end of Ukrainian transit from 1 January, but increased withdrawals driven by weather over the rest of this winter could still contribute to refilling risks this summer, he said.
Wag loop start-up
The so-called Wag loop project to boost pipeline capacity to Austria from Germany failed to reach a final investment decision (FID) last year, but remains on schedule, Strugl told Argus.
After Ukraine stopped Russian gas transit at the start of this year, Austria strongly increased imports from Germany through the Western Austria Gas Pipeline (Wag). The Wag loop would increase entry capacity from Germany at Oberkappel by around 30pc, equal to 27 TWh/yr or roughly 74 GWh/d.
The lack of an FID on the Wag loop does not represent a delay, Strugl said. Austrian network operator GCA is "progressing well", having completed land acquisition and an environmental impact assessment, and it is on track to be commissioned by 2027, he said.
The Austrian government in March last year announced €70mn in subsidies for the Wag loop.
