European levels of gas storage can withstand the winter.


After a mild winter and unprecedented supplies of liquefied natural gas (LNG), European gas storage levels have fallen sharply, but replenishment will be a challenge this summer.

The winter gas season lasts from October to March, and summer lasts from April. Wholesale gas prices and demand tend to be lower in the summer, and more gas goes into storage. However, this did not happen last year.

Global supply has been constrained by strong Asian demand for LNG and lower-than-normal Russian pipeline flow. In the summer, wholesale prices rose sharply, and gas injection was limited by storage.

As a result, Europe entered the winter with the lowest gas reserves in the last 10 years.

There are fears that if the country invades Ukraine, Russian gas supplies will be cut off and prices will reach record levels. Russia has deployed troops near the border with Ukraine, but has repeatedly denied involvement in the attack.

Laura Page, senior LNG analyst at analyst firm Kpler, said: “This will play into the demand recovery.”

According to Rystad Energy, storage levels in North-West Europe are about 10% lower than they were by 2021. Data from Europe’s gas infrastructure show that reserves in Europe are at a five-year low of 32.6%.

“A record 13.15 billion cubic meters of LNG was shipped to Europe in January as Asia stopped competition for cargoes from the Atlantic basin,” said James Waddell, head of European Gas Consultancy Energy Specs.

European LNG supplies will remain strong this year but are expected to fall from current levels as Asian buyers must buy back, Japan has covered its nuclear blockade with LNG and Asian demand is growing, he added.

However, new LNG capacity coming online this year could provide more supply, and producers may delay closing LNG infrastructure to take advantage of higher prices, Carlos Torres Diaz said. This was reported by the head of electricity and gas markets Rystad Energy.

He added that Russia is unlikely to send large volumes of natural gas to Europe this year due to its reluctance to order additional pipeline capacity.

Another problem is the lack of financial incentives for replenishment. Putting gas in storage is expensive. That means buyers need lower prices in the summer than the following winter to build up inventory, but wholesale gas prices are just as high until next year.

A draft document seen by Reuters on Friday shows that the European Union suggests that countries replenish their natural gas reserves before each winter to shore up supplies and cope with supply disruptions. Help me

“The Commission proposes a legal requirement for member states to ensure a minimum level of storage by September 30 of each year, with the possibility of making changes,” the draft document says.

The commission said companies are unlikely to be able to stockpile enough gas based on market incentives alone, as gas prices are expected to remain high until at least the end of the year.

Leave a Comment