Ministers from the International Energy Agency member countries will likely issue a communique Feb. 14 including measures to bolster its gas security role, a Japanese government source involved with the communique drafting process told S&P Global Commodity Insights Feb. 13.
The move follows discussion at the IEA Task Force on Gas and Clean Fuels Market Monitoring and Supply Security (TFFS), looking at ways to ensure the long-term supply security of natural gas and LNG.
Following the TFFS discussions, the ministers will formally request the IEA governing board -- its highest decision-making body -- consider steps to boost transparency in gas supply outage and emergency information, as well as to enhance gas reserve mechanisms, including through policy measures, the source said.
The IEA ministerial meeting and its 50th anniversary are taking place in Paris Feb. 13-14. During the anniversary events, energy and climate ministers will discuss the latest developments in energy markets and policies, and set the agency's strategic direction for the coming years.
The IEA ministerial communique is expected to recognize the IEA's work on regular market monitoring and its assessment of supply disruptions that cause price peaks and volatility, as well as helping its members diversify gas supply sources, the source said.
It will also likely recognize the importance of appropriately functioning global LNG markets and a regulatory framework for gas storage and reserve mechanisms, the source added.
With the TFFS's mandate expiring in October 2024, the ministers will also request that the IEA's governing board require any succeeding body to consider and analyze ways to bolster gas supply flexibility, transparency and security, the source said.
Japan, a founding member of the IEA, has been calling for the TFFS to consider multiple ways to enhance gas security through underground gas storage, policy measures such as Japan's "Strategic Buffer LNG" and contractual flexibility in LNG contracts.
EC regional framework
Asked to comment on whether the EU would support developing gas security cooperation with the IEA, European Commissioner for Energy Kadri Simson said Feb. 13 that a framework for regional emergency measures is already in place.
"So, if one of our member states will be cut off from some supply, then using reverse flows we can support neighbors. And we do have a solid network of underground gas storage sites," Simson told S&P Global on the sidelines of the IEA ministerial meeting in Paris.
"There is a target of filling these sites and as a result we do have right now at the end of the heating season a record level of gas storage levels across Europe," she said.
When asked if this could be expanded to include other partners, she said that "the market conditions are so different," adding that the EU's joint exercise to secure gas purchase from global markets includes neighboring states Serbia, Moldova and Ukraine.
Gas security concerns
Concerns about stable gas supply increased significantly in 2022 when Russia invaded Ukraine. Russia was a major pipeline gas supplier to Europe before the war started, but attacks on infrastructure and Russian counter sanctions led to the suspension of supplies to many countries, as well as major price hikes.
Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at a record high of Eur319.98/MWh in August 2022. Since then prices have fallen, and the benchmark was last assessed at Eur25.715/MWh Feb. 12.
Emergency measures taken to mitigate the impact of Russian cut offs, as well as milder weather, have eased some of the pressure on buyers to secure supply.
Lower prices have reduced the urgency to develop closer supply security, and technical issues mean that it would be difficult to model a strategic gas reserve on the strategic petroleum reserve.
"The global gas system has just confronted its most major supply disruption relatively effectively with its current set-up," according to Michael Stoppard, chief strategist for global gas at S&P Global.
Prices have fallen as the European market has adapted to the drop in Russian supplies, successfully implementing minimum storage levels, reducing consumption and bringing more import capacity online. Mild weather has also helped consumers through the crisis.