EU depletes gas storage at fastest pace in three years – FT

The European Union is emptying its gas reserves at the fastest rate since the energy crisis of three years ago. This is due to cold weather and a decrease in the volume of sea imports, which caused an increase in demand.

Writes UNN with reference to the Financial Times.

Details

According to industry body Gas Infrastructure Europe, the volume of gas in storage in the block fell by about 19% from the end of September, the end of the stocking season, to mid-December.

By comparison, the previous two years saw only a modest decline in inventories over the same period, as unseasonably warm weather kept storage levels relatively high during the heating season and industrial demand remained subdued due to high gas prices.

Europe has had to rely much more heavily on its underground storage this winter than it has in the past two years to offset a drop in liquefied natural gas imports and meet growing demand

Europe is facing increasing competition for liquefied natural gas (LNG) imports from Asian buyers, which are attracting lower prices than in previous years. This led to a slowdown in LNG supplies and more active use of accumulated reserves.

The last time Europe’s gas storage was depleted at such a rate was in mid-December 2021, when Russia cut pipeline gas supplies ahead of its full-scale invasion of Ukraine.

As of mid-December, storage capacity in the EU stood at 75%, higher than the average over the past decade as countries struggled to reduce dependence on Russian gas. However, this indicator is significantly lower than the level of 90% recorded in the same period last year.

Gas prices in Europe are currently around 90% lower than a peak of €300 per megawatt hour in the summer of 2022, but the rapid use of reserves in the winter could make replenishment next year more difficult and expensive.

Traders are already predicting higher gas prices for next summer’s delivery than for next winter’s delivery, suggesting rising costs of restocking.

The EU has an obligation to fill gas storages by 90% by the beginning of November, in accordance with the norms of the European Commission.

However, some countries show lower figures. Much of the gas supply comes in the form of LNG, which has recently become politically sensitive.

US President Donald Trump said that the EU must commit to buying “significant” volumes of American oil and gas, otherwise it will face tariffs.

At the same time, Qatar threatens to stop LNG supplies if member states strictly adhere to new environmental and social standards. The US is currently the largest supplier of LNG to the EU, while Qatar is the third.

An additional factor in the increase in demand was the cold weather and the so-called Dunkelflaute – periods when neither solar nor wind power plants produce energy, which forces an increase in gas consumption for electricity generation.

Demand for industrial gas in northwest Europe rose 6% in January-November 2024 from lows in 2023, said Anna-Sophie Corbeau, a researcher at Columbia University’s Center for Global Energy Policy.

Gas reserves in individual countries decreased unevenly. In the Netherlands, volumes decreased by 33%, in France – by 28% since the beginning of winter.

We will remind

This winter, namely from January 1, the supply of Russian gas through Ukraine will stop.