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Denmark calls on market players to store gas amid system vulnerability

Highlights

Gas industry 'must take responsibility': grid operator

Denmark's two gas storage sites 76% full as of Dec. 1

European gas prices at sustained highs on supply concerns

Denmark's gas grid operator Energinet warned Dec. 3 that the country's gas system was currently more vulnerable than usual and called on market players to store more gas ahead of the peak winter season.

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Stocks across Europe are much lower than usual after only modest injections over the summer, with Denmark's two storage sites currently only 76% full, according to data from Gas Infrastructure Europe.

At the same time last year, stocks were 94% full in the sites at Stenlille and Lille Torup near Viborg, the data show.

"The gas system is currently more vulnerable than usual and the gas industry itself must take responsibility for ensuring that the supply remains stable and safe," Energinet said in a statement.

"The players in the gas market themselves have a great responsibility to avoid gas shortages as the weather gets colder and gas consumption increases," it said.

Denmark consumes around 3 Bcm/year of gas, with supplies to Sweden also dependent on Danish transit. Denmark's gas stocks are currently at around 6.9 TWh (0.65 Bcm), according to the GIE data.

Denmark was previously a net exporter of gas, but turned to imports after Tyra -- the country's biggest field -- was taken offline by operator TotalEnergies in September 2019 for major redevelopment work.

The field is not expected to restart before mid-2023.

German connection

Energinet said the supply of Danish and Swedish gas consumers was expected to remain robust over the coming winter, but deputy director Jeppe Dano said there was still time to boost Danish stocks.

"It is important that the players continuously buy gas and put it in one of the two Danish gas storage sites," Dano said.

"And it is possible to put gas into storage -- the connections from Germany aren't being fully utilized right now and as long as the weather isn't colder than it is, there's a good opportunity to import more gas and store it for later," he said.

With Tyra closed, the supply to Danish and Swedish consumers comes primarily from Germany, domestic biogas production and the two gas storage sites.

Biomethane currently accounts for some 25% of the gas in Denmark's grid.

However, Energinet said that on cold winter days, total demand cannot be met by imports from Germany and biogas alone. "Therefore, stocks must be filled continuously," it said.

Concerns about winter gas supply and the prospect that Europe could see its stocks fall to unprecedented lows before the end of the current winter have helped keep gas prices at close to record highs.

The TTF day-ahead contract was priced Dec. 2 at Eur92.60/MWh ($30.70/MMBtu), a 525% year-on-year increase, according to S&P Global Platts price assessments.

Platts assessed the TTF day-ahead price at a record high of Eur116.10/MWh on Oct. 5

Supply security

Energinet said that according to the Danish Gas Supply Act, responsibility for the the country's gas supply security is twofold.

Energinet itself is responsible for ensuring that the transmission network has the correct capacity and that there is an emergency stock to cover the Danish gas needs of the protected customers for 30 winter days if the supply from Germany is interrupted.

In addition, operators are responsible for securing the gas that gas consumers need on an ongoing basis.

Supplies of gas into Sweden are done solely through the Danish gas system, and the supply situation during the Tyra renovation has led Swedish gas consumers to fear that Sweden will have to shut off the gas during the winter.

Energinet looked to play down those concerns. "It is important to say that gas consumers –- including in Sweden -- should not fear that the gas will be shut off," Dano said.

He said that market players "must take responsibility so that we do not end up in a situation where, in the event of an incident or prolonged, severe cold weather, there is a shortage of gas."

"Gas consumers, including the large companies, can influence this by making sure that their suppliers have stored enough gas," Dano said.