Europe may not have natural gas next winter

Europe may find it difficult to supply its natural gas storage facilities by next winter as storage levels are at their lowest in the past decade.

Russia, which supplies a third of Europe's natural gas needs, said gas supply through vast pipeline networks will continue.

On Monday, Russian gas producer Gazprom issued a statement warning that there will be "serious challenges" in supplying European gas storage facilities for the coming winter, considering that "such significant volumes of gas" are needed and it is not. never happened before the summer months. A nice way to get your hands on.

Gazprom said there may be daily restrictions on injections due to the technological capabilities of the pipeline infrastructure. Then there is also the risk of damage to the pipelines that pass gas from Russia through Ukraine. Furthermore, the European markets will be competing with the growing demand from the Asian markets.

Bloomberg data shows that German underground deposits "are full" for 70.6%, while those in France are 77.1%. The withdrawal of gas from European storage lasts until the end of March and, in some cases, the beginning of April. Gas injections begin shortly after to supply the continent for the summer months and before next winter. However, with storage levels at a decade low, filling up before next winter could be a challenge.

Then there is the risk that Russia limits natural gas flows to Europe in retaliation for a series of new sanctions that froze the Russian central bank's assets and that some Russian banks have been removed from the SWIFT financial messaging system. , which caused total chaos in Russian markets on Monday. especially in the currency markets.

Wood Mackenzie analyst Kateryna Filippenko told Reuters: “ Europe may have to use all available tools to keep the lights on, reducing gas consumption and starting nuclear and coal plants out of service; maximizing local gas production and pipeline imports “.

Filippenko said, however, that these are temporary solutions, which risk leaving Europe with "dangerously low storage volumes" in the winter, adding that energy prices "could be higher than 2021/22".

Kaushal Ramesh, an analyst at Rystad Energy, also agrees with Filippenko: " Late 2022 and early 2023 could see prices closer to winter 2021 and could be higher ".

Although Europe's benchmark, Dutch gas prices, are below their December record highs, prices rose 60% on Thursday after Moscow invaded Ukraine.

The good news so far is that "Western nations have barred Russian commodity exports from sanctions," said Mark Haefele, chief investment officer for global wealth management at UBS Group AG.

"But positions are shifting rapidly and Western nations have already begun to implement measures that seemed unlikely a few days ago and the White House has declared that energy sanctions are on the table," Haefele said.

Even as Gazprom continues to pump gas to the continent hit by the energy crisis, there are real risks that supply disruptions may be seen or at least pipeline capacity in Europe may not be able to inject enough gas to replenish supplies before next winter. , which could very well translate into higher energy prices.

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The article Europe may not have natural gas for next winter comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/leuropa-potrebbe-non-avere-il-gas-naturale-per-il-prossimo-inverno/ on Wed, 02 Mar 2022 07:00:23 +0000.