Gas storage facilities in the European Union (EU) are being depleted at the fastest pace since the 2021 energy crisis, primarily due to increased demand caused by colder weather and a reduction in gas imports via maritime routes. According to the European association of gas storage operators, Gas Infrastructure Europe (GIE), EU gas storage levels have decreased by approximately 19% from the end of September (marking the conclusion of the gas market’s filling season) through mid-December.
In contrast to the past two years, when gas storage saw relatively small declines due to mild temperatures and lower industrial demand, this winter has seen higher gas consumption as Europe faces reduced liquefied natural gas (LNG) imports and competition for LNG from Asian buyers. Additionally, colder temperatures and reduced electricity generation from solar and wind power have led to greater reliance on gas for power generation.
As of mid-December, EU gas storage is at 75% capacity, slightly above the 10-year average before the EU began efforts to reduce dependence on Russian gas. This is lower than the previous year’s storage level of around 90%. The depletion of reserves this winter raises concerns about the difficulty and cost of replenishing these reserves for the next winter season.
Gas prices in Europe are currently around 90% lower than the record highs of the summer of 2022, when they exceeded 300 euros/MWh. However, the rapid depletion of storage could drive up prices again, especially as Europe faces challenges related to its reliance on LNG imports, which have become increasingly politicized. The US is the largest LNG supplier to the EU, while Qatar ranks third. Furthermore, geopolitical factors, such as US pressure for more LNG purchases and Qatar’s threats to halt deliveries if certain EU regulations are enforced, add complexity to Europe’s energy landscape.
