The Croatian Government has instructed state-owned utility HEP to buy at least 1.1 billion kWh of natural gas, or about 1.1 TWh, after commercial market participants did not refill the country’s underground storage fast enough for the 2026–27 heating season.
The measure follows a government review of injection rates at the Okoli underground gas storage facility. The assessment concluded that the injection plans submitted by storage users would not generate sufficient inventories before winter.
Okoli storage levels lag 2025 and broader EU trend
Okoli was reported at 50.4% full, compared with 67.7% during the corresponding period of 2025. The shortfall aligned with a wider European pattern, with average EU storage levels at 53.4%, down from 65.3% a year earlier.
The government said slower injections were largely linked to high wholesale prices. Gas futures were trading around €60–63/MWh, leading some suppliers to delay purchases in the expectation that prices might fall before the end of the injection season.
HEP-Plin procurement and supplier-of-last-resort designation
HEP was selected to carry out the procurement because its subsidiary HEP-Plin is being designated supplier of last resort through a regulatory process overseen by the Croatian Energy Regulatory Agency. The role places the state-owned group at the centre of emergency supply arrangements.
Croatia set a near-term target for Okoli to reach at least 80% by the start of October. European rules generally require storage levels of 90% by 1 October, while limited flexibility allows inventories to stay no lower than 80% during October-to-December.
Capacity leasing and risk transfer from private users
Before implementing the measure, the government consulted companies holding storage rights at Okoli. Users with unused allocations agreed to make capacity available voluntarily, enabling HEP-Plin to lease additional space beyond its existing entitlement.
The companies involved were not disclosed because their storage positions are commercially sensitive. The procurement shifts part of timing and price risk from private suppliers to HEP, which must balance prompt purchases against staging acquisitions if market prices soften without affecting injection schedules.
LNG supply role and cost sensitivity to gas prices
The cost impact depends on how gas is bought and how it is handled after storage. At around €60/MWh, a purchase of 1.1 TWh implies a wholesale commodity value of roughly €66 million, excluding transport, storage, financing and balancing expenses.
A relatively small change in gas prices can therefore materially affect costs ultimately borne by HEP, consumers or the state. Krk LNG is expected to contribute a large share of physical supply, with about 70% of gas entering Croatia’s transmission system already arriving via the terminal, whose commercial capacity has been fully booked for more than a decade.
Storage adequacy versus market-driven injection timing
The intervention reflects tensions between market optimisation and security-of-supply obligations tied to winter adequacy. Storage holders may prefer waiting for better prices, while governments cannot rely entirely on speculative purchasing behaviour when required inventories must be achieved before winter demand begins.
Croatia has chosen to use HEP’s balance sheet to close that gap.
