Supply Risks Cloud Europe's Winter Gas Market Optimism | Energy Intelligence

Oct 18, 2024

Optimism over Europe’s ability to navigate peak winter gas demand has been building amid robust gas inventories and moves to diversify supply. There is growing confidence Europe can cope without Russian piped gas flows via Ukraine as the transit deal is set to expire on Dec. 31. But global balances remain tight, with potential for a wider market disruption if the near-term demand pull is stronger than expected. EU inventories are 95% full and are an “insurance against supply disruptions," Energy Commissioner Kadri Simson said this week. But net withdrawals began this month, and the consensus view is that Europe will experience a colder winter than the past two mild winters, meaning storage may be drained faster. The EU’s inventories could be 40% full by the end of winter even if the remaining Russian piped gas flows cease, according to Entsog’s winter supply outlook, published this week. The International Energy Agency (IEA) has said a halt of flows via Ukraine “would not pose an immediate supply security risk to Austria, Hungary or Slovakia,” highlighting robust storage capacity and access to LNG through terminals in Germany and Italy. Over 50 billion cubic meters of regasification capacity has been added across Northwest Europe since 2022. But any move to replace lost Russian flows with LNG will likely be expensive for central and southeastern Europe due to the cost of inland transportation through limited pipeline capacity, according to EU energy regulator Acer.