EU gas storage at historic lows, risking winter shortfall: IEEFA

• EU gas storage is at its lowest level since 2011, at about 73% full in early October.
• A 7% cut in winter gas demand, or 14 billion cubic meters, may be required.
• European gas prices have risen dramatically since early March due to the Hormuz crisis.
• The EU will fully ban imports of Russian LNG starting January 1, 2027.

Historically low levels of natural gas in storage sites could leave the European Union with a gas shortfall heading into winter, potentially forcing demand cuts of 7%, according to a report by the U.S.-based Institute for Energy Economics and Financial Analysis (IEEFA).

European natural gas prices have soared dramatically since early March, reflecting the tight global gas market exacerbated by the crisis in the Strait of Hormuz, which has trapped a fifth of the world’s liquefied natural gas supply. Most of Qatar’s LNG supply remains offline, with no clear timeline for the return of normal shipping through the Strait of Hormuz.

As winter approaches, storage levels are at their lowest since records began in 2011. The EU is heading into winter with gas storage at about 73% full as of early October, the IEEFA analysis found. Cold snaps this coming winter could further complicate the EU’s gas supply, which will also reflect the bloc’s full ban on imports of Russian LNG starting January 1, 2027.

The potential shortfall could require the EU to cut winter gas demand by 7%, or 14 billion cubic meters (bcm), compared with last winter, according to IEEFA’s report. The current strain on storage levels demonstrates that Europe’s gas dependency is a growing liability, according to Ana Maria Jaller-Makarewicz, Lead Energy Analyst for IEEFA’s Europe team.

In similar findings, ENTSOG, the European Network Transmission System Operators for Gas, said on Thursday that in a case of a colder-than-usual winter but optimal LNG supply, the EU would still have to curb 7% of demand. Policymakers and authorities acknowledge that Europe does not face immediate gas shortages but warn that prices are set to remain much higher than in the past two years as long as the Hormuz crisis persists.