The European Union is set to meet its goal of filling natural gas reserves two months ahead of schedule, with the bloc bracing for a harsh winter as Russia cuts supplies and rising energy prices, the Bloomberg agency.
Inventories in the EU were 79.4% full by August 27, compared with a target of 80% by November 1, according to Gas Infrastructure Europe (GIE) inventory data. The EU tightened its rules on storage earlier this year after levels last winter proved lower than in previous years, particularly at German facilities controlled by Russia’s Gazprom, contributing to a sharp rise in energy prices .
Natural gas storage helps absorb supply disruptions and provides about 25% to 30% of the fuel consumed in winter. With higher stockpiles, European nations are slightly better placed to face a further supply cut as Gazprom begins unexpected maintenance on the Nord Stream 1 pipeline on Wednesday.
Cooler temperatures in Eastern Europe and parts of the Iberian Peninsula next week will also help states save more on natural gas, as less energy is expected to be used for cooling.
European gas prices on Monday posted their biggest drop since March after Germany reported that its natural gas storages were filling up faster than planned. The fall in prices brings some relief after a frenzied rally with prices still trading nearly six times higher than a year ago.
The EU wants to reduce dependence on Russia, the region’s biggest energy supplier in recent years. The flows are set to be replaced by increasing renewables, greater efficiency and imports of liquefied natural gas (LNG) from other suppliers in the Mediterranean region, Africa, the Middle East and the US.
A mandatory minimum stock level would boost security of supply this winter and the following heating seasons, the Commission said earlier this year. Commission President Ursula von der Leyen said on Monday the bloc would also take intervention measures in electricity markets, intervening in the short term to moderate rising electricity costs and ultimately seeking to break the link between natural gas prices gas and electricity.
In Poland, stocks were almost 100% full by 27 August, while Portugal’s warehouses were full. Italian warehouses were 81% full, while Hungarian 62% and Bulgarian 60%, according to GIE data.
In Germany, natural gas storage facilities are filling up fast and are expected to reach the October target of 85% filling as early as next month, Economy Minister Robert Habeck said on Sunday.
But even with gas tanks fully charged, Germany risks not being able to make it through the winter if Russia cuts gas flows, Klaus Mueller, president of the Federal Grid Service, the country’s energy regulator, said in an interview with Bloomberg earlier this month.
The country, the EU’s biggest energy importer, is restarting coal-fired power plants to save natural gas. It is also scrambling to commission new infrastructure to import LNG from around the world, with the first two floating terminals due to go live this winter.
French Prime Minister Elizabeth Bourne, meanwhile, has urged businesses to cut energy use, or power vouchers are likely to be needed this winter if Russia halts gas deliveries.
“There could be violent gas interruptions overnight and serious economic and social consequences,” he said on Monday, adding that “companies will be the first to be hit” by the implementation of the notices.
With more than 90% of natural gas storage currently full, France is expected to have enough in reserve to weather a winter of mild temperatures, Engie executive vice president Claire Waysand said on Monday.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
