The European Union (EU) is expected to fill up its underground natural gas facilities ahead of schedule, according to a report by Rystad Energy. It is estimated that European gas stocks were around 76% full as of June 25, compared to 56% during the same period last year. This increase in gas storage is significant and has the potential to have an impact on gas flows and divert them elsewhere.
Lu Ming Pang, a senior analyst at Rystad, stated that based on historical demand and different supply scenarios, storage facilities could even reach full capacity before the winter season this year. This means that the EU may reach its 90% gas storage target sooner than the November 1 deadline that was set in place. These targets were established by the EU following a decrease in imports from Russia to the region due to sanctions imposed by Western countries during the Ukraine conflict. The destruction of the Nord Stream pipeline, which delivers gas from Russia, further affected supplies in the EU.
To counteract these difficulties, the EU began stockpiling gas at the beginning of the year. However, the inflow of gas has recently slowed down due to high demand from industrial consumers. Despite this slowdown, European gas storage sites in early June were 48% higher than the ten-year average for the same period.
In addition to the increased gas stocks, there has been a rise in natural gas prices throughout June. This price surge is primarily driven by concerns that hot weather in northern Europe and unplanned production outages in Norway would lead to an increase in demand for liquefied natural gas (LNG). This surge in demand could potentially put the EU in competition for supplies.
According to Rystad Energy, natural gas prices have increased approximately 38% since the beginning of the month. This increase can be attributed to the prolonged maintenance at Norway’s Oseberg natural gas field, which has been extended until July 5.
Overall, the EU’s efforts to fill up its gas storage facilities ahead of schedule is a positive development that will ensure the region’s energy security. However, the increase in natural gas prices highlights the need for diversification of energy sources and the promotion of renewable energy alternatives.
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