The Netherlands lowers gas storage targets to ease price pressure, but preparedness for harsh winter decreases

⑴ In view of the ongoing Middle East conflict, the Dutch government will lower its natural gas storage target to ease upward pressure on wholesale prices. ⑵ The Dutch Ministry of Climate announced that the new storage target is set at 64% of storage facility capacity, a decrease of 10 percentage points compared to the previous target. ⑶ The ministry stated that this move is in response to the European Commission’s call earlier this year for countries to lower their natural gas storage targets. ⑷ The Dutch government expects to reach this new target between October 1 and December 1. ⑸ The Dutch Ministry of Climate said the new, lower target equals 93 billion kilowatt-hours of natural gas reserves, which is sufficient for an average winter. Over the past five winters, the average winter consumption of reserves in the Netherlands was around 70 billion kilowatt-hours. ⑹ However, the state-owned natural gas operator Gasunie noted that the country’s readiness for a potential cold winter has decreased. ⑺ Amidst fierce competition for LNG and limited shipments from Qatar, lowering the storage target may suppress prices in the short term but also weakens the supply cushion. Continued attention should be paid to the match between Europe’s winter temperatures and the pace of inventory consumption.