Round 1 of the gas war goes to the EU

Despite the concerns over the winter, it seems Europe is on course to get through winter with its gas storage facilities more than half full, according to a report by the European Commission. 

Welcome news after months of worry and fear that energy shortages would be all the rage thanks to Putin’s disruptions to pipeline supplies. 

But what has allowed this to happen?

It seems that a combination of mild weather, increased imports of liquefied natural gas (LNG) and a big drop in gas consumption has meant that more than 50 billion cubic metres (bmc) of gas is projected to remain in storage by the end of March, according to the Commission analysis.

Ending winter with such healthy reserves removes any lingering fears that a gas shortage may be on the horizon in the short term. It also means that Europe’s energy security moving into the next winter is more secure.

Furthermore, if the EU needs to import more gas, analysis by the Independent Commodity Intelligence Services suggests that refilling storages whilst it may be a challenge, will be easier for the EU to meet, given the efforts taken in the last winter. 

Five new floating LNG terminals have been set up across the EU- in the Netherlands, Greece, Finland and two in Germany- providing an extra 30 bcm of gas import capacity, with more expected to come online this year and next.

Of course, it should not be forgotten that the EU’s ability to refill gas storages to the new 90% target ahead of next winter will depend on continued reduction in gas consumption.

To reach this, Brussels has encouraged member states to cut gas demand by 15% from August of last year. Which consequently saw gas demand actually fall by more than 20% from August to December, according to Commission data, largely thanks to efficiency measures but also due to consumers responding to higher prices by using less energy.

The 15% target may need to be extended beyond the March deadline to avoid a gas demand rebound as prices fall.

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