LNG imports fall, gas storage tanks poorly filled: EU agency brings gas

Europe is heading into winter with low gas reserves and declining LNG supplies. Now, the European regulatory agency ACER figures out the procurement pressure in its new gas market report: In the authority's baseline scenario, the EU needs around 900 terawatt-hours of liquefied natural gas (LNG) that will be injected into the gas grid after re-gasification to cover consumption and the remaining reserves from last winter. This is eleven percent above the highest comparison value from the past five winters. Germany, in particular, starts with a significant deficit. As of Tuesday, domestic gas storage levels are 61.65 percent full according to data from Gas Infrastructure Europe (GIE), while Italy's are at around 90 percent. At the same time, European gas prices rose above 97 euros per megawatt-hour on Monday. Additional LNG terminals are available. But for this, Europe must procure LNG, competing with Asian buyers. ACER: Gas consumption must fall without more LNG The 900 terawatt-hours correspond to about 78 billion cubic meters of natural gas. ACER assumes gas consumption will be like last winter and a storage level of around 28 percent at the end of the heating season. The average over the past five winters was only around 662 terawatt-hours injected into the grid, with a peak of 812 terawatt-hours. ACER assumes high pipeline imports and high European gas production. Russian pipeline imports are set at the level from before winter. The authority has not checked whether the calculated storage trajectories are technically feasible. Travel highlights Travel highlights exclusively for you MoreACER does not consider the required LNG volumes fundamentally incompatible with the existing import infrastructure. However, free terminal capacity does not guarantee delivery. "Europe has built enough import terminals but hasn't secured enough LNG," warned EWI researcher Hendrik Diers in the summer, as reported by the Berliner Zeitung. If the LNG injection this winter only reaches the average of the past five winters, the EU would have to reduce its gas consumption by about six percent compared to before winter to end the heating season with a storage level of 20 percent. According to ACER, milder weather or reactions to high prices could reduce consumption. The authority also names mandatory consumption restrictions as a possible measure. Gas price hits 95 euros: Germany enters winter with low gas reserves "Fallen into its own pit": Putin mocks EU's exit from Russian gas – what he is hiding Italy boosts gas storage – Germany lags behind On October 21, EU storage levels were an average of 75 percent full according to ACER. Germany and the Netherlands were below their historical filling curves during the summer. Together, these two countries own about a third of Europe's storage capacity. Rehden, Germany's largest reservoir, was only 18 percent full on October 21. Italy supports filling the reservoirs with financial incentives and strict regulations. German operators, however, criticized unfavorable price signals in the summer to the Berliner Zeitung: short-term available gas was more expensive than deliveries for winter. Traders thus had to buy expensively without being able to count on correspondingly higher selling prices. "The current low storage levels must be taken seriously and mean a smaller buffer compared to previous winters," explained reservoir operator EWE in August in response to the Berliner Zeitung. As the filling level decreases, so does the possible daily gas withdrawal. USA supply less LNG – Europe's dependence grows In the past summer, the US supplied about 64 percent of EU LNG imports and around 30 percent of all EU gas imports. However, the amount of US LNG imported fell by nine percent compared to last year's summer. Its share still grew because other deliveries decreased more sharply. Overall, the EU imported about 14 percent less LNG. ACER points out in the report missed deliveries from Qatar due to the Iran war and disruptions in the Strait of Hormuz, as well as increased competition from Asia. About 30 percent of European LNG imports come from the spot market. LNG is usually delivered where buyers offer higher prices. Numerous tankers that were supposed to head to European ports have changed course in recent months and instead traveled to Asia because LNG prices there were higher. Russia also remains relevant for Europe's gas supply, despite the impending import ban into the EU starting in 2027. Russia's share of EU LNG imports was 14 percent in the summer; the volumes only decreased by about two percent compared to last year's summer. The planned exit increases the demand from other sources. However, there are doubts as to whether Europe can find alternatives. "I do not expect that Russian pipeline gas and LNG supplies can be sustainably replaced from other sources," said Thomas Geisel, former director of natural gas purchasing at Eon Ruhrgas and former mayor of Düsseldorf, in a previous interview. Weakly filled gas storage: How robust is the government's safety promise? USA drive Russian gas transit through Ukraine – Germany pushes back Why German gas consumers face an expensive winter New contracts also offer little short-term help. The state gas importer Sefe signed a supply contract on Monday for one million tons of LNG annually from Canada for 20 years, as the Berliner Zeitung reported. However, the first deliveries are not expected until the early 2030s and are not reserved for Germany. The Federal Network Agency still assesses the supply as stable and the risk of a strained gas supply as low. Sufficient gas is available on the world market. The agency points to the interplay of pipeline imports, storage, LNG, and demand. However, if Europe has to buy expensive LNG in the short term during winter, households and businesses face higher gas bills. Your opinion is important to us. Send us your feedback on this article at: briefe@berliner-zeitung.de