The European Union (EU) is depleting its natural gas reserves at the fastest pace since the energy crisis of 2021, driven by colder weather and a reduction in seaborne liquefied natural gas (LNG) imports. The volume of gas in EU storage facilities has dropped by 19% from the end of September, when the seasonal refilling period typically ends, to mid-December, according to data from Gas Infrastructure Europe, an industry association.
This sharp drop contrasts with the previous two winters, when gas storage levels remained relatively stable due to milder weather and reduced demand, partly as a result of industries scaling back consumption due to higher energy prices. Over the same period in the last two years, storage levels saw only single-digit reductions. However, this winter, Europe has found itself relying much more heavily on underground gas storage to meet increased demand amid lower imports, a situation exacerbated by fierce competition for LNG from Asian markets.
As The Financial Times reports, the EU’s storage facilities are currently at 75% capacity, which is marginally above the 10-year average for mid-December, before European governments ramped up efforts to reduce their dependence on Russian energy supplies. Last year, however, storage levels stood closer to 90% at this time, highlighting the more challenging circumstances this winter.
Natasha Fielding, head of European gas pricing at Argus Media, noted that Europe’s reliance on underground reserves has become much more pronounced this winter. She explained, “Europe has had to rely much more on its underground stores so far this winter than in the past two years to make up for lower liquefied natural gas imports and to meet stronger demand.”
The slowdown in LNG imports has been driven in part by competition from Asian buyers, who have been drawn to lower prices in recent months. This has further strained Europe’s ability to replenish its gas stocks, forcing the continent to lean on its existing reserves. The last time gas storage was emptied at such a pace was in 2021, when Russia began reducing gas supplies ahead of its invasion of Ukraine, triggering a full-scale energy crisis across Europe.
European gas prices are currently about 90% lower than the record highs seen during the summer of 2022, when the energy crisis reached its peak. However, as storage facilities continue to empty out, traders are already anticipating higher prices for gas delivery next summer compared to winter 2024, signaling that replenishing reserves could become more difficult and expensive in the coming months.
EU member states are required to fill their gas storage facilities to 90% of capacity by the start of November each year, under a mandate from the European Commission. While some countries face lower targets, the need to ensure adequate reserves for the upcoming winter is a priority. This year, the situation has been complicated by a combination of colder weather spells, a reduction in renewable power generation due to periods of low wind and sunlight (referred to as “Dunkelflaute”), and a recovery in industrial gas demand. Demand for industrial gas in nine northwest European countries has risen by 6% from January to November 2023, compared to the previous year, according to Anne-Sophie Corbeau, a global research scholar at Columbia University’s Center on Global Energy Policy.
Some EU countries have been more affected than others. The Netherlands, for example, has seen a 33% drop in stored gas volumes since the start of the winter season, while France has experienced a 28% decline. These significant withdrawals underscore the uneven impact of the energy situation across the continent.
Looking ahead, another potential source of concern for European gas supplies is the impending expiration of the transit agreement that allows Russian gas to flow through Ukraine to Europe. The agreement, which supplies around 5% of the EU’s gas imports, is set to end next year. While some industry experts, including Andreas Guth, Secretary-General of Eurogas, have suggested that there is no immediate cause for alarm, any disruption to this supply would add further pressure to Europe’s already strained reserves. Guth stated, “There doesn’t seem to be a major concern around the potential halt of Russian gas through Ukraine. That being said, every marginal volume of gas is, of course, going to make a difference in the filling season.”
