Europe nears gas storage target
August 30, 2022 - European natural gas prices plunged by a fifth as the EU met its gas storage reserves mark two months ahead of target. The bloc plans to reduce gas consumption by 15 per cent this winter.
Reserves in the EU were filled up to 79.9 per cent as of August 27, compared with the target of 80 per cent by November 1. According to Gas Infrastructure Europe inventory data, the bloc has 887.5 terawatt hours of fuel -- more than the UK used in 2021.
Gas storage helps absorb supply shocks and provides around 25% to 30% of the fuel consumed in winter.
The European Parliament boosted its storage rules in June after levels last winter turned out lower than in past years. Under the new rules, countries that do not have gas storage facilities -- Cyprus, Estonia, Finland, Greece, Ireland and Lithuania -- will collaborate with member states owning facilities to secure their reserves.
In 2021, Russian natural gas exports to the EU amounted to 1,550 terawatt hours via pipeline and around 120 TWh of liquefied natural gas (LNG). Europe would have to replace about 1,620 TWh should Russia stop its natural gas exports to Europe completely.
Countries across Europe are rushing to install new LNG facilities. New pipeline projects connecting LNG terminals to inland Europe will boost LNG demand on the continent, according to Matteo Illardo, Europe analyst for RANE risk intelligence.
“Spain, for instance, has six functioning LNG terminals, but has limited pipeline capacity,” Illardo said.
“A potential new gas connection between Spain and France is now being discussed and could be ready to operate in just eight to nine months,” he added.