Article Switzerland: Government Adopts Ordinance to Ensure Adequate Natural Gas Supply During Ukraine Crisis

In its session on May 18, 2022, the Swiss Federal Council (government) adopted an ordinance to prevent a looming natural gas shortage resulting from the ongoing war between Russia and Ukraine. The National Economic Supply Act (NESA) (Landesversorgungsgesetz, LVG), which the ordinance is based on, allows the government to take preparatory measures to ensure the “[continued] production, processing, and delivery” of the national economic supply of natural gas in the event of imminent or already existing serious shortages. (NESA art. 5, para. 4; art. 57, para. 1.) The ordinance requires certain regional gas network operators to implement appropriate measures to ensure that Switzerland will have a sufficient supply of natural gas between October 2022 and April 2023 in the event of a serious shortage. (Ordinance art. 2.) The ordinance entered into force on May 23, 2022, and will expire on September 30, 2023. (Art. 7.)

Content of the Ordinance

The ordinance provides that certain listed regional gas network operators must guarantee that there are physical reserves of natural gas as well as call options to procure additional natural gas. Appropriate measures are the joint procurement of natural gas to ensure the national supply, the conclusion of contracts with third parties to store natural gas nationally or internationally, or the purchase of additional cross-border import pipelines to transport natural gas to Switzerland. The companies may include extra costs that cannot be offset otherwise in the user fees. (Ordinance arts. 2, 3, 4.)

In particular, starting on November 1, 2022, the companies must guarantee the availability of physical reserves of a minimum of 15% of the average annual consumption of commercial grade natural gas in Switzerland. (Ordinance art. 2, para. 2.) The average annual consumption in Switzerland is 35 terawatt-hours. According to the Federal Council, half of these physical reserves are already reserved by the regional companies Gaznat and GVM in France.

In addition, they must guarantee that, starting on November 1, 2022, they are in possession of call options to procure at least an additional 20% of the average Swiss consumption of natural gas for the months from October to April. (Ordinance art. 2, para. 3.) These call options on non-Russian gas will be purchased in France, Germany, Italy, and the Netherlands. They allow the companies to buy the gas at an agreed-on price on short notice.

Background to the Ordinance

Switzerland is completely dependent on imports for its natural gas supply. Furthermore, it does not have its own storage facilities. For those reasons, the Federal Council decided in March 2022 to facilitate the procurement of gas and storage capacities in neighboring countries. In addition, a task force of the gas industry in conjunction with federal agencies developed a concept to ensure an adequate gas supply for winter 2022/2023. The Federal Council took note and enacted the benchmarks of the concept in the ordinance discussed above.

Updated to correct date of Swiss Federal Council session from March 18 to May 18, 2022.

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Switzerland: Government Adopts Ordinance to Ensure Adequate Natural Gas Supply During Ukraine Crisis
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Chicago citation style:

Switzerland: Government Adopts Ordinance to Ensure Adequate Natural Gas Supply During Ukraine Crisis. 2022. Web Page. https://www.loc.gov/item/global-legal-monitor/2022-05-30/switzerland-government-adopts-ordinance-to-ensure-adequate-natural-gas-supply-during-ukraine-crisis/.

APA citation style:

(2022) Switzerland: Government Adopts Ordinance to Ensure Adequate Natural Gas Supply During Ukraine Crisis. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2022-05-30/switzerland-government-adopts-ordinance-to-ensure-adequate-natural-gas-supply-during-ukraine-crisis/.

MLA citation style:

Switzerland: Government Adopts Ordinance to Ensure Adequate Natural Gas Supply During Ukraine Crisis. 2022. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2022-05-30/switzerland-government-adopts-ordinance-to-ensure-adequate-natural-gas-supply-during-ukraine-crisis/>.

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