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The European Union’s gas stocks have declined to a record low at the start of the summer, with the region’s storage facilities only 56.9% full as of August 1. This is a significant drop compared to the 57.3% of the same date in 2021, raising concerns about the adequacy of supply as the toughest winter in five years looms on the horizon.
According to Argus, the European natural gas market briefing, the EU’s storage capacity has grown since 2021, but the absolute low in terms of gas volume was recorded on August 6, at 659.5 TWh, which is just below the 659.9 TWh recorded in 2021. By August 10, the storage facilities were only 59.1% full, representing a shortfall of 23.1 percentage points compared to the average capacity for that date between 2023 and 2025.
The primary reason behind the stalled refill of gas stocks is the reduced supply of liquefied natural gas (LNG) to Europe. According to Kpler data, European imports of LNG over the fortnight from July 27 to August 9 were 15% lower than the same period last year. This reduction in LNG supply has led to a surge in demand from countries with warmer climates, such as northeast Asia, where prices for gas remain high.
The shift in demand towards Asia has resulted in higher prices for gas in Europe. The TTF (Title Transfer Facility) front-month contract price peaked at €62.90/MWh on July 24, only to drop to €52.71/MWh on August 5, before climbing back above €60/MWh on August 10 and again on August 12. The fluctuations in price are largely due to the ebb and flow of hopes and concerns regarding a US-Iran deal, which has a direct impact on global gas markets.
The situation is even more dire in Belgium, a critical transit hub that plays a vital role in the supply of gas to northwest Europe. Data from the Zeebrugge LNG terminal shows that sendout volumes fell to 22 GWh/d over August 3-9, a fraction of the three-year average of 188 GWh/d. Belgium has not received a single LNG cargo since July 27 and has only one scheduled vessel for the remainder of the month, the Venture Gator, which is expected to arrive on August 27.
The situation is a stark reminder of the EU’s reliance on gas imports, particularly from Russia, which supplied a record volume of gas to the region in the first four months of the year. As the winter months approach, the EU faces a daunting task of meeting its gas demand while navigating the complexities of supply chain dynamics and geopolitical tensions.
This development has significant implications for the EU’s energy security and its efforts to transition away from fossil fuels. As the region confronts a harsh winter, policymakers will have to balance their environmental commitments with the need to ensure a reliable supply of energy to households and industries.