European gas storage stocks could fall 2-3 weeks earlier than usual

Oil&Gas Materials 17 December 2021 12:04 (UTC +04:00)
European gas storage stocks could fall 2-3 weeks earlier than usual

BAKU, Azerbaijan, Dec.17

By Leman Zeynalova – Trend:

Natural gas production in Europe is unlikely to increase significantly, and the same remains true of imports from Norway (which already seem to be operating at full capacity) and from Algeria (which are now constrained by the cessation of Moroccan transit to Spain), Trend reports with reference to Oxford Energy Institute (OIES).

Gazprom is also likely to continue limiting its supplies to the fulfilment of long-term contract commitments, with little or no additional offerings to the spot market pending the launch of Nord Stream 2, which almost certainly will not start flowing significant volumes until after the end of winter, OIES said in a report.

The Institute notes that LNG supply remains variable, and highly dependent on developments outside of Europe, in terms of both supply and demand.

“An optimistic scenario would see global LNG supply rebound from outages sooner rather than later, coupled with a mild winter in North-East Asia, while a pessimistic scenario would see the opposite. Finally, European storage stocks are already being drawn down significantly, and could feasibly fall to 55 bcm by the end of December, some 2-3 weeks earlier than usual,” the OIES analysts say.

In effect, OIES believes that Europe will walk a tightrope in the coming months, and may be able to chart a path if the winter in Europe is mild and windy, and North-East Asia also avoids a surge in weather-related LNG demand. But any divergence from that path will potentially leave Europe exposed to price surges beyond the prevailing already high level.


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