In all likelihood, Europe will not be able to meet its gas storage target before the start of the next heating season. It stipulates that states should have reservoirs filled to at least 80%. This was said on Wednesday by the financial director of the Norwegian oil and gas company Equinor Torgrim Reitan, citing the lower-than-expected current storage capacity and the unfavorable situation in connection with raw material prices as the reason. Reuters reported about it.
- European gas reservoirs will probably not be filled to eighty percent before winter.
- The average capacity of European reservoirs reaches thirty percent, below the seasonal norm.
- Higher prices for short-term gas contracts inhibit the incentive to buy gas in advance.
- The war in the Middle East reduced Qatar’s LNG export capacity by about a fifth.
- A surplus in the LNG market is not expected until at least the end of this decade.
Gas reservoirs in Europe are currently filled to an average of 30%. This is six percentage points less than the seasonal norm, Reitan stated. However, the situation with gas prices, when the price for closer contracts is higher than for the winter period, is not exactly an incentive for increased purchases of raw materials in this period. “So we think that it is very likely that the reservoirs will not be filled to the specified 80% of their capacity before the onset of winter,” said Reitan, according to which the European gas market will be vulnerable to weather fluctuations or operational problems.
The situation on the gas market in Europe was most recently complicated by the war in the Middle East, which began at the end of February after the US and Israel attacked Iran. The war has reduced Qatar’s liquefied natural gas (LNG) export capacity by almost a fifth, and experts say it will last for five yearsbefore the damaged equipment can be repaired and the production can be restored to its original state.
“Therefore, we currently do not expect as much of a surplus in the LNG market by the end of this decade as we expected half a year ago,” Reitan added. At the same time, he pointed out that while the oil market could return to normal after the re-opening of the Strait of Hormuz within half a year, it will take much longer in the case of the gas market.
