AhlulBayt News Agency (ABNA): The Financial Times reported on Friday, citing the latest data from the European Gas Storage Aggregation System, that the EU's gas storage facilities were only 65.6 percent full as of September 3, the lowest recorded level for this time of year since record-keeping began 15 years ago.
According to this report, the sharp rise in gas prices during the warm months deterred energy companies from purchasing and injecting gas into storage. Traders had expected prices to fall with a reduction in tensions in West Asia and a normalization of gas exports from the region, but the prolonged war and continued supply disruptions have upended these calculations.
Now, Europe not only enters the cold months with storage levels far below normal, but also has limited time to make up the deficit. Energy industry executives in Europe have warned that the technical capacity for gas injection is limited, and even with access to additional cargoes, it is not possible to quickly fill storage facilities.
Huibert Vigeveno, CEO of the European gas and power company M.E.T., said in this regard, "The main issue is not just the amount of gas available in the market, but the amount of gas that can be injected into storage in the remaining time." He added that storage facilities can only receive a certain volume of gas in each time period.
Underground storage typically supplies about one-third of Europe's gas consumption in winter, with the rest of the continent's needs met through pipelines and LNG imports. Low storage levels mean that Europe will be more dependent on imported cargoes during the cold months and will be more vulnerable to price volatility and any new supply disruptions.
Surveys show that the situation of storage facilities is not uniform across Europe. Germany and the Netherlands, which are important storage and distribution hubs on the continent, have announced that they will likely not meet their national targets for the winter. Germany's storage target is set at 70 percent, and the Netherlands' target at 80 percent.
Concerns in Germany have increased to the point that the German Gas Storage Industry Association has called on the government to remove some costs imposed on storage facilities and provide subsidized loans to accelerate the filling process. The association has warned that current market conditions have made gas purchasing and storage economically difficult for companies operating in this sector.
The Netherlands has also taken an unprecedented step, allocating one billion euros so that the state-owned company Energie Beheer Nederland can purchase and store more gas this year and in 2027. The company managing the Dutch energy network had previously warned that the country was not sufficiently prepared for a very cold winter.
Experts from EU member states and representatives of the European Commission met on Thursday to review storage levels and the continent's preparedness for the cold season, but despite acknowledging the exceptional nature of market conditions, they did not decide on immediate intervention.
Lucie Bost, President of the European Gas Infrastructure Association, said, "If the market faces several simultaneous shocks, conditions will become problematic." Anne-Sophie Corbeau, an expert at Columbia University's Center on Global Energy Policy, also warned that European officials should not rely on optimistic assessments, as experience has shown that crises sometimes occur simultaneously.
Although analysts do not currently consider widespread gas shortages to be the primary scenario, and prices remain far from the record highs of 2022, low storage levels have increased the likelihood of sharp price volatility in winter. This is while European countries' efforts to purchase additional cargoes could also intensify competition in the global LNG market and raise prices for other importers.
The United Kingdom, due to its very limited storage capacity, is among the most vulnerable European countries. During the cold months, the country imports a significant portion of its gas needs through pipelines connected to the European market and LNG cargoes. Therefore, any price increase or supply disruption could directly increase household energy bills and the cost of industrial activities in the UK.
Now, with the approach of the cold season, the consequences of the military aggression by the United States and the Zionist regime against Iran have become increasingly evident in the European energy market. Declining gas reserves and rising prices show that the cost of this adventure has not been limited to the region, but has been directly transferred to European households and industries.
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