Supply Problems Dog EU's Gas Storage Plans

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Europe faces a difficult summer as fears of a Russian gas cutoff and an extended outage at the US Freeport LNG plant complicate plans to refill storage tanks ahead of the winter season. The EU is aiming to replace two-thirds — or 100 billion cubic meters — of Russian-sourced supplies this year through increased renewable capacity, energy efficiency measures and import diversification, and is requiring countries to fill EU-wide storage tanks to 80% by Nov. 1 this year. The refill targets are just about achievable despite recent setbacks, but they depend on volatile variables such as continued US LNG imports that will ensure continued high gas prices into next year and beyond. Storage inventories are needed as a buffer against unexpected bouts of high demand and pricing volatility, commonly brought upon by winter cold snaps. At current storage levels of around 54 Bcm as of mid-June, the EU still needs to inject around 25 Bcm of additional gas to meet the 80% November requirement. To put the challenge into perspective, US LNG exports to Europe so far this year total roughly 26 million tons, or around 35 Bcm. This already exceeds the previous full-year record of 24.1 million tons of US LNG that Europe imported in 2021, according to commodities data provider Kpler. More broadly, the EU is looking to source 60 Bcm of additional alternative piped gas and LNG from non-Russian suppliers.

Gas Inventories, LNG Supply, Gas Demand, Gas Supply, Gas Pipelines, LNG Trade, Ukraine Crisis
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