Four years after the energy crisis triggered by Russia's full-scale invasion of Ukraine, Europe's gas supply security is under pressure again. The war in the Middle East has disrupted the process of filling European gas storage facilities, which are at their lowest level for this time of year since 2021. This raises new concerns about natural gas supplies and prices in the coming winter, writes Agence France-Presse, BTA reported.
The level of gas reserves in Europe is the lowest since 2021
Natural gas continues to be of key importance to the European economy, being used for industry, heating buildings and generating electricity.
Summer is usually the period in which gas buyers fill underground storage facilities, taking advantage of lower prices compared to the winter months.
According to data from the Association of European Gas Infrastructure Operators (Gas Infrastructure Europe, GIE), European gas storage facilities are currently filled to an average of 58 percent. This is the lowest level since 2021, when Russia began gradually limiting gas supplies to Europe.
According to Anne-Sophie Corbo, a researcher at the Center for Global Energy Policy at Columbia University, at this time of year the usual fill level is between 75 and 80 percent.
A combination of factors
Several factors are behind the current situation. According to the analyst from „Kpler“ (Kpler) Ronald Pinto The European Union ended the last heating season with stocks only 28 percent full, which is significantly lower than in previous years.
An additional impact was the outbreak of conflict in the Middle East at the end of February, which affected supplies of liquefied natural gas, including those from Qatar passing through the Strait of Hormuz, and led to a sharp increase in prices.
Under these conditions, European buyers postponed some of the purchases to replenish stocks with the expectation that prices would subsequently decrease, Kpler said. This has reduced the economic incentive to pump gas into storage during the summer months. Rystad Energy said the limited availability of LNG from the Middle East continues to pose a serious risk to Europe.
Ronald Pinto also warned that while Europe is better prepared to deal with potential supply disruptions, risks remain related to possible supply problems from Norway, as well as possible disruptions to LNG exports from the United States during a cold winter or unplanned repairs to production facilities.
Prices likely to remain high
Under these conditions, “there is likely to be an increase in prices, especially if Qatar and the United Arab Emirates (UAE) encounter difficulties in exporting LNG“ through the still blocked Strait of Hormuz, Anne-Sophie Corbo believes.
According to Ronald Pinto, the European reference price for natural gas “will remain high until the end of the year“, with average monthly values expected to be between 55 and 62 euros per megawatt-hour.
Asia, and in particular China, which has been severely affected by the crisis around the Strait of Hormuz, is competing directly with Europe for the available quantities of liquefied natural gas, which is further pushing up prices.
“For now, we see that liquefied natural gas is heading towards Asia rather than Europe, because the prices there are higher“, Anne-Sophie Corbo points out.
Other factors could also influence the market, including the severity of the winter and the amount of electricity produced by wind farms.
According to her, if If gas storage facilities remain at a lower level, the winter turns out to be colder than usual and additional supply problems arise, Europe may again be forced to take measures to limit consumption, similar to those taken in 2022.
As of August 9 this year, the Chiren gas storage facility in Bulgaria was filled to 48.6 percent of its capacity, according to the latest data published on the website of the Association of European Gas Infrastructure Operators.