The European Union (EU) natural gas market is expected to face turbulence during the upcoming winter season, despite the bloc’s storage facilities being almost full, according to Norwegian energy company Equinor. Currently, gas reservoirs in the EU are at 97.89% capacity, surpassing the bloc’s target of 90% by November 1. While this provides a cushion ahead of the heating season, Equinor CEO Anders Opedal warned that increased competition with Asia for liquefied natural gas (LNG) could push prices up.
Opedal stated at the Energy Intelligence Forum in London, “We actually expect the market to be quite volatile over the winter. We will do everything we can to make sure that we maximize gas to come through the pipes, but Europe will be dependent on the LNG supply.” Equinor is the largest gas producer on the Norwegian continental shelf and the second-largest gas supplier in Western Europe.
Last year, global gas prices reached all-time highs after the EU reduced purchases from Russia, leading to record imports of LNG and efforts to reduce consumption within the bloc, particularly by industry. LNG became the primary source of gas for the EU, accounting for up to 35% of total imports. To compensate for gas supply shortfalls, the EU has relied on high-priced shipments of LNG from the US and Qatar, as well as increased pipeline imports from Norway and Azerbaijan.
Despite the storage facilities being almost full, Equinor claims that EU imports are still insufficient to meet the demand. The association of German gas storage operators, INES, recently warned that Germany, the bloc’s most industrialized economy, will continue to face the risk of gas shortages until 2027 unless it accelerates the construction of additional LNG terminals, expands gas storage capacity, or builds more pipelines.
The EU’s reliance on LNG and the competition with Asia for supplies have created uncertainty in the European gas market, leading to potential price fluctuations during the winter season. As such, the bloc will need to closely monitor and manage its gas supply, ensuring maximum utilization of existing infrastructure while exploring options to increase domestic production and diversify imports.
In conclusion, the European gas market is expected to experience turbulence in the coming winter despite the EU’s near-full storage facilities. The bloc’s dependence on LNG and potential competition with Asia for supplies could lead to price volatility. Equinor and other stakeholders will continue to work towards maximizing gas supply through existing infrastructure while addressing the need for additional LNG terminals, expanded storage capacity, and pipelines to ensure energy security in the region.