At the start of the energy crisis in 2021, not many would have predicted that Europe would emerge from consecutive winter seasons with its energy system unscathed. At the end of April, European gas storage stood at 62% full, which is above the five-year average of 47%, as well as the 60% in the corresponding period of last year.1 This has left the continent in a comfortable position to refill its gas storage over the summer months.
Europe’s decision to increase LNG imports and its successful introduction of gas-saving measures have been key to its resilience over the past two years, as has the fact that the region has benefitted from a couple of mild winters. The continent’s ability to ride out a harsh winter has yet to be tested. Speaking recently at the Europe Flame Gas and LNG Conference in Amsterdam, Cara MacDonald, Head of LNG and Clean Fuels Supply at RWE Supply and Trading, said: “Had we had a cold winter, or if we have a cold winter, this year [or] next year, the amount of flexibility on the demand side will diminish more significantly.”2 The clear message is that the industry must not be complacent, as things can change very quickly.
However, for now, analysts are warning that the EU may need to scale back its imports of LNG in the coming months to ensure that it does not fill its storage capacity too early. Natasha Fielding, Head of European gas pricing at Argus Media, believes Europe has a “problem of plenty” this summer, with the possibility that the bloc could achieve its target of 90% capacity by the start of November in early August if the pace of injection is similar to last year. Fielding said: “Europe may need to take less LNG this summer to balance out weaker demand and slow the pace of the stock build, thereby avoiding sites filling early.”3
In the Autumn 2023 issue of Tanks & Terminals, I commented on how Europe was turning to Ukraine to store excess gas reserves in the country’s underground gas storage (UGS) sites. Oleksiy Chernyshov, the CEO of Naftogaz – Ukraine’s national energy company – has now called on EU countries to help protect its storage infrastructure following a number of Russian attacks. Aboveground storage sites in the west of the country have suffered damage following Russian shelling, while its UGS facilities have also been targeted. Following an attack on an underground facility in March, Chernyshov said that storage and capacity booking continued to be fulfilled as planned: “The situation will not critically impact the UGS operations since the gas is stored deep underground. The damaged surface infrastructure will need repairs, however we have sufficient backup capacities in place to mitigate any immediate impacts.” Despite the attacks, Naftogaz hopes to increase the amount of European natural gas stored in its facilities from 2.5 billion m3 last year to 4 billion m3 this winter.4 Ukraine also continues to operate as a transit route for Russian pipeline gas into Europe, under a deal signed between Naftogaz and Gazprom in 2019, which will finish at the end of this year. As Chernyshov has argued in an interview with the Financial Times: “It is of interest of the EU to protect storage, transportation and production [facilities]”, given that Ukraine’s gas infrastructure is “well integrated” into Europe’s energy system.4
- PATTERSON, W., ‘European gas rallies despite bearish outlook’, ING, (7 May 2024).
- RASHAD, M., ‘Europe’s ability to survive a cold winter hasn’t been tested, energy execs say’, Reuters, (23 April 2024).
- TANI, S., ‘EU exits winter with gas storage at record levels’, Financial Times, (2 April 2024).
- TANI, S., ‘Ukraine energy chief calls on EU to help protect gas storage from Russia’, Financial Times, (30 April 2024).
