Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions on the Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security of natural gas supply
Date: 2008-11-13
Institutions: European Commission
Subjects: natural gas, report, security of supply

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.11.2008 
COM(2008) 769 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF REGIONS 

on the Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security 
of natural gas supply

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF REGIONS 

on the Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security 
of natural gas supply 

(Text with EEA relevance) 

TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

3.6. 

3.7. 

3.8. 

4. 

4.1. 

4.2. 

Introduction .................................................................................................................. 3 

The notion of security of gas supply: an undefined notion.......................................... 3 

Evaluation of the implementation of Directive 2004/67/EC........................................ 4 

The scope ..................................................................................................................... 4 

The security of supply standards.................................................................................. 5 

Roles and responsibilities of market players................................................................ 5 

The definition of Major Supply Disruption ................................................................. 6 

Community mechanism ............................................................................................... 6 

The Gas Coordination Group ....................................................................................... 7 

Transparency and Reporting ........................................................................................ 7 

Instruments for security of gas supply and national emergency measures .................. 7 

Options for the future ................................................................................................... 8 

Scope and better implementation of security of supply standards at national level .... 8 

Community mechanism and solidarity......................................................................... 9 

4.2.1.  Regional vs. EU level................................................................................................... 9 

4.2.2.  Re-definition of the Community actions...................................................................... 9 

4.3. 

4.4. 

5. 

The security of supply margin.................................................................................... 10 

Strategic storage ......................................................................................................... 11 

Conclusions ................................................................................................................ 11 

ANNEX 1: Comparison among Member States ...................................................................... 13 

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1. 

INTRODUCTION 

Natural gas is currently the second most important fuel in the EU's energy mix, representing 
roughly a quarter of EU gross inland consumption. It is widely used in various sectors, such 
as  power  generation,  district  heating,  households  and  industry.  The  purpose  of  this 
Communication is to examine and discuss proposals on how the EU could approach security 
of gas supply more effectively in the current and future situation and which elements of the 
current EU policy on gas security supply should be further developed. 

Security of supply, as one of the three pillars of the energy policy for Europe defined by the 
European Council in March 2007, is more and more seen as a public good deserving a closer 
attention  from  the  European  Union.  Interdependency  between  external  suppliers  and  EU 
consumers, the integration of the national markets into a single European market are features 
which  have  to  be  fully  taken  into  account  to  assess  the  present  gas  supply  situation  of  the 
European Union and the measures to be implemented in the case of disruption.  
The internal gas market is under development. It is regulated by Directive 2003/55/EC1 and 
Regulation 1775/20052 which would be revised with the proposal made in September 2007, 
the  so-called  third  package  on  the  internal  electricity  and  gas  markets3.  To  strengthen  the 
regulatory  framework  as  regards  gas  security  of  supply,  Directive  2004/67/EC4  concerning 
measures to safeguard security of natural gas supply was adopted. As set out in Article 6.3, 
the  Commission  has  to  report  to  the  European  Parliament  and  the  Council  on  the 
implementation and effectiveness of the Directive. The Directive has been implemented and 
transposition measures notified to the Commission by all relevant Member States5. 

2. 

THE NOTION OF SECURITY OF GAS SUPPLY 

There  is  no  easy  definition  for  security  of  gas  supply.  Most  commonly  it  means  the 
availability  of  gas  to  users  at  affordable  prices.  In  any  case,  a  distinction  needs  to  be  made 
between  long-term  and  short-term  security  of  gas  supplies,  as  the  risks,  the  ways  to 
prevent supply problems and the possible mitigation tools are different.  

Long term gas supply security depends mainly on  
–  the management of demand (20-20-20 policy6); 

–  the  evolution  of  EU  indigenous  production,  which,  given  new  technologies  and  high 

prices, might be further explored or possibly promoted; 

–  an  effective  external  energy  policy  of  the  EU:  currently  58%  of  the  consumed  gas  is 
produced within the EEA and 42% is imported from outside EEA. However, import from 
third  countries  is  much  higher  for  "new  Member  States7"  (63%)  than  for  "old  Member 

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Directive 2003/55/EC of 26 June 2003 concerning common rules for the internal market in natural gas 
(OJ L 176, 15.7.2003, p. 57). 
Regulation  (EC)  No  1775/2005  of  28  September  2005  on  conditions  for  access  to  the  natural  gas 
transmission networks (OJ L 289, 3.11.2005, p. 1). 
Proposal  for  a  Directive  amending  Directive  2003/55/EC  concerning  common  rules  for  the  internal 
market in natural gas - COM(2007) 529, 19.9.2007. 
Council Directive 2004/67/EC of 26 April 2004 concerning measures to safeguard security of natural 
gas supply (OJ L 127, 29.4.2004, p. 92). 
Malta and Cyprus were exempt, but Malta has transposed it in its legislation. 
Communication - 20 20 20 by 2020 - Europe's climate change opportunity - COM(2008) 30, 23.1.2008. 
New Member States: the countries who joined the EU after 1 May 2004. 

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States" (39%). Good cooperation with existing producer and transit countries is therefore 
crucial, along with the development of new sources and routes, and the development and 
implementation of policies to influence the evolution of supply and demand balance in the 
global gas market;  

–  the  promotion  of  investment  in  infrastructure  to  bring  supply  and  demand  together,  both 

within the EU and between the EU and external suppliers and 

–  the achievement of a well functioning internal gas market in the EU. 

The  internal  gas  market  needs  to  be  completed.  Competition  between  gas  and  other  fuels 
should not be hindered by subsidies, price regulations or anti-competitive pricing, influencing 
its  position  in  the  fuel  mix.  A  well-functioning  internal  market  will  improve  access  to 
infrastructure,  provide  appropriate  price  signals  for  investment  in  new  infrastructure  and  it 
will enhance the attractiveness of the EU gas market for suppliers, thus enhancing security of 
supply. 

This communication focuses in first place on the short-term security of supply. 

Short-term  supply  security  and  solidarity  between  Member  States  are  high  on  today's 
agendas relating to the gas markets. In a well functioning internal market, appropriate price 
signals  trigger  a  matching  of  demand  and  supply  and  direct  gas  to  where  it  is  valued  most 
highly.  However,  market  failures  may  still  exist  and  currently  there  is  no  defined  EU 
emergency plan to deal with short-term supply shortfalls or disruptions beyond the level at 
which market mechanisms, industry and national emergency measures are insufficient. A pre-
defined emergency plan at regional or EU level would be more effective and timely than the 
current ad-hoc decision process, in the case of a substantial threat to EU gas supplies. 

3. 

EVALUATION OF THE IMPLEMENTATION OF DIRECTIVE 2004/67/EC 

Member  States  are  in  very  different  starting  positions  concerning  the  security  of  their  gas 
supplies, which is influenced by the following factors: availability of indigenous production, 
geographic  position,  geological  potential  for  storage  facilities,  historical  development  of 
individual gas markets, varying levels of existing interconnections and the different uses for 
gas which determines its degree of substitutability (household heating or power generation). 
The  Directive  has  taken  these  differences  into  account  by  leaving  space  for  individual 
member states to adapt the standards and the measures to their own specificities. 
The  Commission  has  evaluated8  how  the  Directive  has  been  implemented  in  each  Member 
State. This Communication summarizes the most important findings. 

3.1. 

The scope 

The Directive sets the obligation for the Member States to "ensure that supplies for household 
customers  inside  their  territory  are  protected  to  an  appropriate  extent"  in  cases  of  partial 
supply disruptions and extreme winter weather conditions. The Directive allows the scope to 
be  extended  to  small  and  medium  size  enterprises  and  customers  without  fuel  switching 
possibilities. This definition thus does not take into consideration price aspects and does not 
provide  further  details  on  the  appropriate  extent.  Eight  Member  States  have  extended  the 
scope of the protection beyond households. 

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http://ec.europa.eu/energy/gas/sos/index_en.htm  

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Further examination is needed on whether alternative security of supply measures exist (like 
fuel switching obligations, compulsory stockpiling of alternative fuels or excess no- gas-fired 
electricity  generation  capacities)  in  those  countries  where  gas-fired  power  generation  is 
predominant  and  the  power  generators  are  not  covered  by  national  gas  security  of  supply 
measures (Luxemburg – 75%, the Netherlands – 60%, Italy – 52% or Ireland – 51%).  

The scope of consumers protected is defined differently in Member States; this constitutes a 
significant  inconsistency  in  the  implementation  of  the  Directive.  It  is  not  demonstrated 
whether this inconsistency implies a different burden on market players in different Member 
States, thus distort competition, and whether the individually set standards provide for similar 
levels of overall supply security among Member States. 

3.2. 

The security of supply standards 

The Directive defines events in which normal market mechanisms would not be adequate and 
Member States would have to be able to ensure gas supplies to an appropriate extent, at least 
to household customers, as follows: 

(a) partial disruption of national gas supplies (level and duration to be determined 
by the Member States based on their own specificities), 

(b)  extreme  winter  conditions:  extremely  cold  winter  peak  demand  (level  and 
duration to be determined by MS) and extremely cold all winter consumption (1-in-
20). 

The security of supply standard is the expression of the level to which each Member State has 
to  be  able  to  cover  gas  demand  of  the  defined  customers  by  its  own  means  (industry  and 
national measures). It is a consequence of the definition of the events described above. The 
transposition in various Member States has led to a very heterogeneous overall picture, and in 
five cases9, the events have not been defined. 

The  national  definitions  of  partial  disruption,  not  further  specified  in  the  Directive,  vary 
from around 10% (in Slovenia) to around 30% (Slovakia) of average gas consumption  with 
durations ranging from 48 hours (Bulgaria) up to 6 months (France). 

The  measures  to  mitigate  the  defined  disruption  should  be  established  as  a  consequence. 
Further analysis is needed to assess if the defined security of supply standards can be met with 
the instruments which the particular Member State has implemented.  

As  to  the  standard  referring  to  winter  peak  demand  and  strong  all  winter  demand,  no 
further  details  have  been  set  out  in  the  Directive.  Their  definition  (amount  and  length)  and 
application differ among Member States, the most commonly used definition being the 1-in-
20 or 1-in-50 rules10. 

Moreover, while some countries have a very in-depth assessment of their gas supply situation 
and the effectiveness of their mitigation tools, including testing them under crisis simulation 
exercises (for example UK, France, Austria), other countries do not. 

3.3. 

Roles and responsibilities of market players 

There are substantial  differences  in  the definition of the roles and responsibilities of  market 
players for security of gas supply. Overall security of supply responsibility is set on different 
market  players,  joint  responsibilities  have  been  established  in  2  Member  States.  The 

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Bulgaria, Greece, Ireland, Luxemburg, Malta. 
The coldest winter in 20 or 50 years. 

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monitoring of security of supply is ensured in 6 Member States by the Ministry, in 4 Member 
States by the regulator, and in the rest by the TSOs. Further examination is needed on whether 
these  differences  make  cooperation  across  borders  difficult  in  crisis  situations.  The  third 
package  on  the  internal  energy  market  has  introduced  the  transmission  system  operators' 
cooperation.  However,  this  refers  only  to  network  development  planning,  relevant  to  long-
term security of supply, not specifically for short-term security of supply cooperation. 

3.4. 

The definition of Major Supply Disruption 

The Directive currently defines a major supply disruption (MSD) as the loss - or risk of the 
loss - of 20% of gas imports from third countries to the European Community for at least 8 
weeks. It has been concluded by the Gas Coordination Group that this indicator is very high 
and  that  shortfalls  which  do  not  reach  this  level  might  nevertheless  require  a  Community 
response.  With  increasing  import  dependency,  it  becomes  more  and  more  unlikely  that  this 
indicator will be reached before Community action is needed. 

On  the  other  hand,  the  MSD  indicator  in  the  Directive  is  not  in  reality  a  precondition  for 
Community  action.  Any  Member  State  can  request  the  Commission  to  activate  the 
Community mechanism if it considers that the shortfall of its gas supplies cannot be managed 
adequately at national level, even if the shortfall does not reach the MSD. 

3.5. 

Community mechanism 

The Directive sets out a three-step-approach: 

First, industry takes measures to deal with a supply shortfall. 

As second step, Member States' national measures are activated. 

If  the  measures  taken  at  the  first  two  levels  are  not  sufficient  to  cope  with  the  shortfall  or 
disruption of supply, "the Commission shall convene the [Gas Coordination] Group […] at 
the request of a Member State or on its own initiative." "The Group shall examine, and, where 
appropriate, assist the Member States in coordinating the measures taken at national level to 
deal with the major supply disruption. […] Where the measures taken at national level […] 
are inadequate to deal with the effects of [a supply shortfall or disruption], the Commission 
may,  in  consultation  with  the  Group,  provide  guidance  to  Member  States  regarding  further 
measures to assist those Member States particularly affected by the major supply disruption", 
or  "the  Commission  may  submit  a  proposal  to  the  Council  regarding  further  necessary 
measures". 

Up till now, the most severe gas supply shortfall occurred in January 2006, affecting around 
one  tenth  of  the  Community's  supplies  from  third  countries  and  lasting  36  hours.  This 
emergency  situation  finally  could  be  managed  by  national  measures.  However,  it  laid  the 
grounds for the first meeting of the Gas Coordination Group, convened at the Commission's 
initiative.  By  the  time  the  Group  met,  full  supplies  had  been  restored.  All  other  supply 
shortfalls have also been successfully managed by industry or national measures. Until today, 
none of the Member States has asked the Commission for Community assistance. 

Nevertheless,  the  need  to  define  a  wider  (regional  or  EU-level)  emergency  plan  and/or 
solidarity  mechanism  is  often  expressed  by  Member  States,  as  today's  Community 
mechanism  might  not  offer  an  effective  and  timely  response  in  case  of  a  crisis.  Currently, 
once the Community mechanism is activated, it takes five days to convene the meeting of the 
Gas  Coordination  Group,  which  then  discusses  the  situation  based  on  the  information 
provided by the Member States and, when justified, by third countries concerned, describing 
the measures they have taken to mitigate the problem. After the discussions, the Group ideally 
should  define  ad-hoc  measures,  which  then  need  to  be  proposed  by  the  Commission  to  the 

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Council, which has to approve them to trigger their entry into force. This process is lengthy 
and in the case of a real crisis might be too slow.  

3.6. 

The Gas Coordination Group 

The  Gas  Coordination  Group,  bringing  together  Member  States  and  the  gas  industry  and 
consumers representatives through their European associations (Eurogas, OGP, GIE, IFIEC, 
BEUC, Eurelectric)11, has proven a successful tool for discussing security of gas supply issues 
and  exchanging  best  practices  at  EU  level.  The  Group  holds  four  regular  meetings  per  year 
and is convened on an ad-hoc basis in cases of risk of significant threats to the Community's 
gas  supplies.  So  far,  all  potential  emergency  situations  were  resolved  before  Community 
actions appeared necessary, therefore the Group's role in agreeing and proposing further (ad-
hoc)  measures  to  the  Council  has  not  been  tested.  The  common  political  message  –  one 
European voice – that the Group can provide is also an important aspect. 

3.7. 

Transparency and Reporting 

An important shortcoming of the Directive is that the data that Member States provide, in line 
with  the  clauses  on  reporting12,  are  not  sufficient  for  assessing  either  the  current  and  future 
long-  and  short-term  security  of  supply  situation  of  the  Member  States  and  the  EU  or  the 
effectiveness  of  the  mitigation  tools.  Member  States'  reporting  obligations  are  limited  in 
frequency  (once  a  year)  and  scope.  Furthermore,  even  these  reporting  obligations  are  not 
adequately  fulfilled  by  all  Member  States:  only  two  Member  States  provided  complete 
reporting.  The information  which is  usually missing is the degree of liquidity of the market 
(provided by three Member States only), incentives for investments, measures to cover peak 
demand and competitive impact of security of supply measures.  

Among  the  measures,  the  reporting  mainly  focuses  on  long-term  contracts  and  maximum 
storage  capacities;  spare  capacities  are  not  known.  No  information  is  asked  about  other 
mitigating  tools,  listed  in  Annex  of  the  Directive,  like  the  extent  of  fuel  switching  and 
interruptible contracts, supply flexibility in indigenous production or import contracts. Some 
Member  States  do  not  collect  these  data.  As  a  good  example,  the  Italian  regulator  collects 
sufficient  data  to  follow  the  evolution  through  the  winter:  beyond  storage  levels  and 
infrastructure  data,  extent  of  interruptible  contracts,  the  conditions  of  import  contracts 
(flexibilities)  have  to  be  reported  to  the  regulator,  who  thus  knows  which  shortfall  can  be 
covered from increases of imports from available suppliers. 

European  Regulators'  Group  for  electricity  and  gas  (ERGEG)  has  issued  new  guidelines  to 
improve  the  quality  and  level  of  detail  in  the  national  reporting.  The  third  package  also 
proposes major data transparency. The additional data to be provided and the frequency need 
careful examination in order to avoid a disproportionate reporting burden on the industry and 
the Member States but at the same time to enable a clear picture of the security of gas supply 
situation in the EU.  

3.8. 

Instruments for security of gas supply and national emergency measures 

The  Directive  provides  a  list  of  instruments  in  the  Annex  without  any  further  specification. 
The  list  is  "non-exhaustive",  allowing  Member  States  to  introduce  further  security  of  gas 
supply instruments, in particular long-term planning procedures and public service obligation. 

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Commission  Decision  2006/791/EC  of  7  November  2006  establishing  the  composition  of  the  gas 
Coordination Group (OJ L 319, 18.11.2006, p. 49). 
Articles 5 of Directives 2004/67/EC and 2003/55/EC. 

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The  different  structure  of  national  gas  markets  governs  the  mix  and  balance  between  the 
various instruments.  

The most frequently used measures are gas storages, long term supply contracts, production 
and  import  flexibilities  and  diversifications  of  gas  supply.  The  diversity  of  measures  gives 
Member  States  the  possibility  to  take  into  account  their  national  circumstances,  but  it 
complicates  the  assessment  of  the  roles  of  the  various  instruments  from  a  European 
perspective.  

18 Member States communicated their national emergency measures to the Commission. 10 
Member  States  developed  their  national  emergency  measures  in  a  systematic  way,  creating 
national emergency plans. The emergency scale differs among Member States.  

4. 

4.1. 

OPTIONS FOR THE FUTURE 

Scope  and  better  implementation  of  security  of  supply  standards  at  national 
level 

It  should  be  carefully  examined  whether  the  mandatory  scope  of  the  security  of  supply 
standards  should  be  extended  beyond  households.  Especially  where  electricity  production 
from  gas  is  significant,  in  the  absence  of  adequate  alternative  measures  (fuel  switching, 
storage  of  alternative  fuel  or  sufficient  spare  capacity),  supplies  to  power  plants  should  be 
ensured also under extreme events. 

The  Commission  should  examine  with  the  Member  States  and  the  industry  whether  the 
differences  between  the  definition  of  roles  and  responsibilities  of  market  players  imply  a 
market distortion or a hindrance to cross-border cooperation in case of crises. 

The incomplete implementation and heterogeneity of security of supply standards have been 
highlighted. Member States should complete implementation. A thorough analysis should be 
carried out for each country to see: 

- whether the individually defined security of supply standards are proportionate to the risks 
incurred; 

-  whether  the  differences  impact  the  competition  or  constitute  a  hindrance  to  solidarity 
agreements.  

This  in-depth  analysis  might  point  to  the  need  to  define  the  security  of  supply  standards  in 
more detail or in a more harmonised way in order to minimise market distortion and have an 
adequate level of security of supply everywhere in the EU. 

The  following  questions  should  be  examined:  are  there  other  events  which  should  be 
considered  beyond  partial  disruption  and  extreme  winter  conditions?  What  should  be  the 
minimum level of short-term security of supply that every Member State individually has to 
be prepared for? How should it be defined?  

Standards for partial disruption could be defined as 

–  a percentage of the average consumption affected; or 

–  the failure of the largest supplier / infrastructure / entry point – the most critical 
among  these.  This  approach  could  contribute  to  the  achievement  of  long-term 
goals: should each Member State be obliged to make provision for the failure of 
its largest gas supplier or infrastructure for a given duration, this could encourage 
diversification of sources or routes, which might cost less than the construction of 
gas storage; or 

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–  specific  targets  to  be  set  up  e.g.  by  the  regulator,  for  interconnection  capacity, 
supply  portfolio  diversification  (e.g.  suppliers  should  not  provide  more  than  a 
certain percentage of supplies from the same source), fuel switching possibilities. 

The  duration  of  partial  disruption  should  be  harmonised  or  established  based  on  common 
criteria. 

For winter peak demand, the same 1-in-20 or 1-in-50 obligation could be introduced along 
with a harmonisation of the duration of the peak. 

The methodology and basic assumptions for the calculation of the extra gas needed in extreme 
winter conditions, both for peak demand and total winter consumption, should be aligned on a 
regional level.  

A further analysis of emergency measures and instruments used by Member States is needed. 
Country peer reviews on security of supply could indicate the best practices and the most used 
means, which may then be shared in the Gas Coordination Group.  

4.2. 

Community mechanism and solidarity 

4.2.1.  Regional vs. EU level 

Regional  cooperation  is  crucial.  The  gas  markets,  dominated  (90%)  by  pipeline  gas,  have  a 
mainly  regional  character:  several  countries  are  linked  along  the  same  major  pipeline 
infrastructure.  Therefore  these  Member  States  usually  depend  on  each  other's  actions  and 
consumption.  If  for  example  there  is  a  shortfall  of  supplies  on  a  specific  pipeline,  Member 
States should co-operate in the allocation of the available supplies, reduction of consumption, 
increase  in  withdrawal  from  storage  etc.  Within  the  EU,  gas  is  physically  transported  only 
through pipelines therefore regional coordination could provide a timely response which EU-
level actions might be unable to do. However, for the same reason, a supply shortage is most 
likely  to  affect  a  whole  region,  which  might  not  be  able  to  cope  with  it  alone.  Therefore  a 
further step could be introduced to the levels of intervention: (1) industry, (2) Member States, 
(3) regional, (4) Community level. If the supply disruption cannot be managed adequately at 
regional level, the region would have the right to ask for Community assistance. 

The third package on internal energy market has partially addressed this issue and proposed 
the  obligation  of  regional  cooperation  and  the  development  of  solidarity  arrangements 
between three or more Member States. However, the exact mechanisms and procedures need 
to be further defined. 

4.2.2.  Re-definition of the Community actions 

As  concluded  in  the  previous  chapter,  the  current  Community  mechanism,  even  though  not 
yet tested, might not provide an effective and timely response in crisis situations. Pre-defined 
actions  would  provide  a  clear,  foreseeable  and  timely  reaction.  The  defined  actions  might 
include:  

–  a common declaration of an emergency situation,  

–  allocation  of  available  supplies  and  infrastructure  capacity  among  the  affected 

countries,  

–  co-ordinated dispatching,  

–  activation of emergency measures in unaffected or less affected states in order to 
increase  the  amount  of  gas  available  to  the  affected  markets  (interruptible 
contracts,  fuel  switching,  storage  withdrawal,  supply  flexibilities  -  see  later: 
security of supply margin).  

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This approach should lead to the definition of an effective EU Emergency Plan, including a 
European  emergency  scale,  which  will  specify  the  nominal  level  of  gas  market  operation, 
prevention mechanisms, as well as different pre-emergency and emergency levels defined by 
disruption volume and by the economic impact. 

The  Community  response  would  be  a  de  facto  solidarity  action.  Solidarity  is  by  no  means 
charity and adequate compensation mechanisms would have to be worked out. 

Each Member State should comply with the defined security of supply standards. If a situation 
arises  in  which  the  effects  go  beyond  the  defined  standards  (a  real  crisis),  this  event  would 
automatically  trigger  the  declaration  of  an  emergency  situation  and  the  activation  of  the 
Community  response  -  solidarity.  This  would  de  facto  abrogate  the  present  "major  supply 
disruption" indicator. The existence of solidarity mechanisms should of course not provide an 
excuse for the Member States to not invest in their own security of supply. 

4.3. 

Transparency 

Adequate  reporting  obligations  should  be  proposed,  in  order  to  increase  transparency  and 
assess  the  EU  security  of  supply  situation.  The  measures  proposed  in  the  third  package  on 
internal energy market to increase transparency should be taken into account: assessment of 
future  supply  and  demand  by  the  European  network  of  TSOs,  the  obligation  to  publish 
aggregated  levels  of  supply  and  demand,  gas  in  stock  and  use  of  gas  storage  and  LNG 
facilities. 

4.4. 

The security of supply margin 

During a supply  shortfall, a gas supply must be guaranteed to households and other entities 
protected by the Directive. Two elements are needed: 

•  increase the available gas for the consumers protected by the Directive and  

•  dispose of sufficient infrastructure to transport the gas to these customers.  

This excess gas and capacities could be called the "supply security margin". The extent of this 
margin  could  be  derived  directly  from  the  re-defined  national  security  of  supply  standards. 
These  amounts  could  then  be  expressed  as  a  percentage  of  average  consumption.  Spare 
capacity and "excess gas" should match such an indicator. 

(a)  Gas  availability:  in  cases  in  which  solidarity/mutual  assistance  is  called  for,  unaffected 
Member states could make available gas for the affected regions up to the extent of their own 
security margin. This "excess gas" could come from a mix of measures, to be defined by each 
Member State: 

–  Interruptible contracts 

–  Storage 

–  Supply flexibility (production, import or LNG) 

b)  Transmission  infrastructure:  Solidarity  can  be  seriously  undermined  if  available  gas 
cannot  be  transported  to  where  it  is  needed.  However,  this  difficulty  should  not  hinder  the 
implementation  of  the  principle.  In  some  cases,  contractual  transfer  of  gas  can  be  done 
through swaps, thus freeing gas in the affected markets even if physical back-flow of gas is 
not  possible.  Such  an  agreement  exists  for  example  between  companies  in  Hungary  and 
France,  where  in  case  of  reduced  supplies  from  Russia,  the  French  company  would  leave 
behind  in  Hungary  their  share  of  supplies.  Solidarity  should  motivate  Member  States  to 
promote  the  construction  of  inter-connectors.  Infrastructure  targets  in  terms  of  route 

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diversification  (expressed  as  number  of  entry  points),  interconnection  level  and  spare 
capacities could be elaborated. 

The  obligation  or  possibility  to  put  gas  at  disposal  by  the  above  mentioned  measures  and 
capacity  must  be  strictly  regulated  (for  example  linked  to  the  declaration  of  emergency)  so 
that it cannot be abused under normal market conditions. 

4.5. 

Strategic storage 

Strategic  gas  stocks  refer  to  the  stockpiling  of  natural  gas  which  is  destined  to  be  used 
exclusively  in  emergency  situations,  hence  inaccessible  under  normal  market  conditions. 
Stockpiling of natural gas is expensive: the cost per unit of energy is much higher than for oil 
(approximately  16.7  MEUR  per  PJ,  compared  to  3.33  of  oil13).  Geological  conditions  may 
also limit in certain areas the development of gas storage facilities.  

Member  States  have  different  levels  of  exposure  to  risks  and  hence  different  gas  supply 
security  requirements  (see  Annex  1).  Strategic  stocks  might  be  the  preferable  or  only  mid-
term  solution  for  countries  with  single-source  dependence  and  high  share  of  uninterruptible 
demand.  The  Commission  does  not  propose  an  EU-level  obligation  as  regards  strategic 
stocks. If a Member State chooses this option as a national measure, the use of strategic stocks 
has  to  be  carefully  regulated  to  avoid  market  distortions:  strategic  stocks  should  not  be 
released  in  non  crisis  situations  to  influence  the  value  of  storage  and  other  flexibility 
instruments that are developed under competitive market conditions. 

Development of commercial storages should be encouraged. 

5. 

CONCLUSIONS 

The  EU  needs  to  take  a  step  forward  on  security  of  gas  supply  and  solidarity.  While  crises 
may be rare, they can have very high economic and social impacts. Therefore the EU needs to 
be prepared to tackle security of supply in an effective way. Today's Community mechanism 
– although fortunately not yet needed – is not sufficient to provide a timely response to a gas 
supply crisis which goes beyond the level that national measures can mitigate. Further, today's 
lack  of  transparency  prevents  the  assessment  of  the  real-time  gas  supply  situation  and 
potential responses within the EU. The Directive therefore needs to be revised along the lines 
proposed in this communication under Section 4. It is the aim of this Communication to open 
a  debate  with  the  Member  States  and  the  European  institutions  as  well  as  with  the 
stakeholders in order to prepare a revision of the Directive 2004/67 which would remedy the 
main shortcomings identified. The following questions arise: 

(1) 

(2) 

How  to  define  comparable  security  of  supply  standards  that  put  equal,  reasonable 
burden on market players while respecting the differences between Member States? 

Should  the  Directive  extend  mandatory  protection  beyond  households  to  power 
generators, small and medium sized enterprises or other vulnerable customers? 

(3)  What  should  be  the  precise  actions  defined  in  the  Community  mechanism,  in  the 

regional and EU emergency plans? 

(4) 

(5) 

(6) 

13 

How should the regions for security of gas supply be best defined? 

How can solidarity be economically compensated? 

How can security of gas supply be strengthened at lowest cost? 

Study on natural gas storage in the EU, European Commission DG TREN, 2008. 

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Although it goes beyond the scope of this Directive, the long-term EU strategy on gas and on 
energy  supply  security,  as  discussed  in  the  Strategic  Energy  Review14,  remains  crucial.  In 
order to reduce the risk and the effects of short-term gas supply shocks in the future, the EU 
has to continue striving for energy efficiency, a well-functioning, well-interconnected internal 
energy market, innovation and technological developments, diversification of the energy mix, 
supplies  and  routes,  and  effective  international  frameworks  and  relations.  Transparency  and 
coordination  between  Member  States'  actions  towards  third  countries  should  contribute  to 
strengthen a single voice on energy topics at international level. In this way, the EU will lay a 
solid basis for security of energy supply in the future. 

14 

Communication of the Commission on The Second Strategic Energy Review - COM(2008) 738. 

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ANNEX 1: Comparison among Member States 

The  following  graphs  illustrate  the  vulnerability  level  of  Member  States  according  to  the 
concentration  of  their  supply  sources15  and  the  share  of  households  and  in  the  total 
consumption and the share of gas in power generation. In absence of protective measures such 
as storage, vulnerability is highest in the upper right quadrant: high household consumption 
combined with low diversification of sources. 

l

s
d
o
h
e
s
u
o
h
f
o
e
r
a
h
S

n
o
i
t
a
r
e
n
e
g
r
e
w
o
p
n

i
s
a
g
f
o
e
r
a
h
S

40%

35%

30%

25%

20%

15%

10%

5%

0%

NL

DK

UK

FR

DE

HU

CZ

PL

IT

BE

RO

AT

ES

SI

PT

GR

SK

LU

IE

LV
LT
SE
FI

EE

BG

0%

20%

40%

60%

80%

100%

Concentration of sources

80%

70%

60%

NL

UK

DK

50%

40%

30%

20%

10%

0%

IT

ES

BE

RO
DE

PL

SI

FR

HU

PT

AT

CZ GR

LU

LV

LT
FI

EE

SE

IE

SK

BG

0%

20%

40%

60%

80%

100%

Concentration of sources

15 

Concentration of sources is calculated as follows: ∑(gas import from country i/total consumption)2, i=1 
to n, data source: Eurostat 2006. 

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