The European Union is emptying its gas storage facilities at the fastest rate since the energy crisis three years ago. This is due to cold weather and a decline in maritime imports, which has led to an increase in demand.
Writes UNN with reference to Financial Times.
Details
According to the industry organization Gas Infrastructure Europe, the volume of gas in the block's storage facilities decreased by about 19% from the end of September, when the replenishment season ends, to mid-December.
By comparison, in the previous two years, only a slight drop in stocks was observed over the same period, as abnormally warm weather kept storage levels relatively high during the heating season and industrial demand remained low due to high gas prices.
This winter, Europe has had to rely much more on its underground storage facilities than in the past two years to compensate for lower liquefied natural gas imports and meet growing demand
Europe is facing increasing competition for liquefied natural gas (LNG) imports from Asian buyers, who are attracted by lower prices than in previous years. This has resulted in a slowdown in LNG supplies and a more active use of accumulated reserves.
The last time Europe's gas storage facilities were emptied at this rate was in mid-December 2021, when Russia cut gas supplies through pipelines ahead of its full-scale invasion of Ukraine.
As of mid-December, the EU's storage capacity utilization rate was 75%, which is higher than the average over the past decade as countries tried to reduce their dependence on Russian gas. However, this figure is significantly lower than the 90% level recorded in the same period last year.
Gas prices in Europe are currently about 90% lower than the peak of 300 euros per megawatt-hour in the summer of 2022, but the rapid use of reserves in the winter may make replenishment more difficult and expensive next year.
Traders are already predicting higher gas prices for next summer's delivery than for next winter's delivery, which indicates a rise in the cost of restocking.
The EU has an obligation to fill gas storage facilities by 90% by early November, according to the European Commission's regulations.
However, some countries are performing below this level. 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 US oil and gas, otherwise it will face tariffs.
At the same time, Qatar is threatening to cut off LNG supplies if member states do not strictly comply with new environmental and social standards. The United States is currently the largest supplier of LNG to the EU, and Qatar is the third.
Colder weather and the so-called Dunkelflaute - periods when neither solar nor wind power plants produce energy - have become an additional factor in demand growth, forcing an increase in gas consumption for electricity generation.
Demand for industrial gas in northwestern Europe increased by 6% in January-November 2024 compared to the lows of 2023, said Anne-Sophie Corbeau, a researcher at the Center for Global Energy Policy at Columbia University.
Gas reserves in individual countries declined unevenly. In the Netherlands, volumes have decreased by 33%, in France - by 28% since the beginning of winter.
Recall
This winter, namely on January 1, Russian gas supplies through Ukraine will be cut off.