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EU gas storage up due to lower demand

Oil&Gas Materials 18 January 2021 13:02
EU gas storage up due to lower demand

BAKU, Azerbaijan, Jan.18

By Leman Zeynalova – Trend:

Owing to the relatively mild winter, which resulted in high filling rates in spring, decreasing demand for gas in industry and power generation in Q2 2020, the average EU storage filling rate was higher on 30 June 2020 than a year before (80.3 percent vs. 73 percent), implying less demand for natural gas in Q3 2020 stemming from storage refilling, Trend reports citing the European Commission.

On EU average, net storage injections made during the third quarter of 2020 were equivalent to 14.3 percent of storage capacity, which was a lower than that of 21.6 percent in the same period of 2019. However, on 30 September 2020 the average filling rate was 2.2 percent lower than a year before (94.7 percent vs 96.9 percent), which might also be related to the market uncertainty in 2019 around the long term future of Russian gas supplies.

Lower demand from storage injection probably did not impact deeply the gas market in Q3 2020, as increase in the wholesale gas prices was driven by increasing demand in the industry, after confinement measures were lifted in June 2020, the generally positive mood on energy commodity markets and by supply side factors, such as cancellations of LNG cargoes and maintenance works on some important gas fields in Europe.

Around 40 percent of the winter gas consumption could be covered from the storages at the beginning of the winter season, with great variation across the EU Member States. In Latvia, Austria and Slovakia the actual storage level could cover the whole local winter gas consumption (though it is worth to recall here that on a single EU gas market local storages may also cover partly the consumption of neighbouring countries, which is important from security of gas supply perspective), in Hungary it would cover almost 90 percent. At the same time, in countries like Sweden, Belgium, Portugal and Spain actual storages could cover at best 15 percent of the winter gas consumption.

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Follow the author on Twitter: @Lyaman_Zeyn

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