Europe's Gas Reserves Emptied at High Speed

European gas storage facilities are being depleted at a rapid pace, as they haven’t been since the energy crisis three years ago, with cooler weather and a decline in sea freight imports driving demand. According to Gas Infrastructure Europe, the volume in the EU's storage facilities has fallen by about 19 percent since the end of the refill season at the end of September and continued to decrease until mid-December. In the past two years, comparatively higher temperatures ensured that supplies remained almost full well into the heating period. Additionally, the increased demand arose as industries reduced gas consumption due to high prices. However, Europe now needs to rely more heavily on its underground gas storage to offset lower imports of liquefied natural gas. Competition for LNG from Asia has increased, driven by more attractive prices. This competition is hindering imports and forcing European countries to draw more deeply on their reserves. The last time EU gas reserves depleted so quickly in December was in 2021, when Russia began reducing its pipeline deliveries. The current fill level of EU gas storage is at 75 percent, just above the average of the past ten years. Last year, it was still nearly 90 percent in December. Although European gas prices are about 90 percent below the peaks of over 300 euros per megawatt-hour seen during the energy crisis in the summer of 2022, depleting storage over the winter could complicate and make the refill process more expensive next year. Already, traders are selling gas for delivery next summer at higher prices compared to deliveries for the following winter. Meanwhile, the EU member states are required by a binding European Commission target to fill their storage facilities to 90 percent by early November, although some countries have lower targets. Geopolitical tensions around LNG are also increasing; the designated U.S. President Donald Trump is urging the EU to purchase "large-scale" quantities of American oil and gas. Qatar has threatened to halt its LNG deliveries if new European laws, which sanction companies for non-compliance with environmental and labor standards, are strictly enforced. The USA is the largest, and Qatar is the third-largest LNG supplier to the EU. Increased gas demand also resulted from cooler weather and "Dunkelflauten," periods when renewable energies are absent. Industrial gas consumption in nine northwestern European countries rose by 6 percent compared to the previous year, reported Anne-Sophie Corbeau from Columbia University. Countries like the Netherlands and France depleted their reserves faster; to 33 percent and 28 percent respectively this winter. Another potential bottleneck looms at the end of next year when the transit agreement for Russian gas through Ukraine expires. This route supplies about 5 percent of EU gas imports, with fears of a stop of Russian gas through Ukraine currently seen as not very concerning.