Europe’s gas inventories continue to swell as the region prepares for winter and a possible interruption of pipeline supplies from Russia, with stocks comfortably exceeding targets set by governments.
But the region has made less progress cutting consumption, which could still leave it short of supplies in the event of an extended cold spell and a halt to Russian deliveries.
Inventories in the European Union and the United Kingdom (EU28) climbed to 1,071 terawatt-hours (TWh) on Nov. 2, compared with a prior ten-year seasonal average of 928 TWh.
Inventory accumulation since the start of April has been the fastest on record (+770 TWh) and stocks have continued rising much later into the autumn than normal.
Inventories are at the second-highest level on record for the time of year and set to increase further, according to data from Gas Infrastructure Europe.
Onshore storage is 95% full compared with the prior 10-year seasonal average of 89% (“Aggregated gas storage inventory”, GIE, Nov. 4).
In addition, a queue of LNG-carrying vessels has formed off the Iberian peninsula and Northwest Europe waiting for berths and better prices to unload.
The vessel queue is effectively floating storage and implies inventories are even higher than the daily reported totals.
Swollen inventories and the shortage of onshore storage space are weighing on prices for gas delivered in November and December.
Benchmark futures prices for gas delivered in December have fallen to 120 euros per megawatt-hour from 350 euros in late August.
DEMAND REDUCTION?
Progress towards the second part of the gas security package agreed by EU officials, cutting consumption by 15% this winter, has been less impressive.
Seven countries (Germany, Italy, France, the Netherlands, Spain, Belgium and Poland) account for 80% of the EU’s total gas consumption.
Their combined gas use was 13-14% below the prior five-year average in August and September, according to preliminary figures from Eurostat.
But that was the result of industrial closures and unusually mild temperatures in the first half of September which delayed the onset of heating demand.
Consumption was below the five-year and 10-year ranges in many countries but the implied demand reduction from non-industrial users was modest when adjusted for temperatures.
The real test lies ahead as temperatures fall: consumption during the annual January peak is roughly two and a half times higher than in July.
The three months between December and February typically account for 36% of annual consumption compared with just 17% between July and September.
Extra seasonal consumption is driven by residential, commercial and industrial space heating, rather than industrial demand, so proportionate reductions will require more profound and widespread behavioural changes.
Despite some high-profile, symbolic measures to cut consumption in government-owned buildings, the willingness of ordinary households and businesses to cut gas use is still unknown.
If significant demand reductions cannot be achieved, inventories will deplete very rapidly during any cold spells in December and January.
