BAKU, Azerbaijan, May 30. As the situation stands in mid-May, European is on track to get back to a ‘normal’ level of storage stocks at the start of winter 2022/23, Trend reports with reference to Oxford Institute for Energy Studies (OIES).
However, the OIES report reveals that this is being underpinned by substantial political will and concerns over the stability of pipeline supply from Russia, rather than favorable seasonal price spreads.
“From around 26 January, the rate of net storage withdrawals began to slow down. On 1 March, total European stocks surpassed those held on 1 March 2018, meaning that from that date, stocks held in 2022 were no longer the lowest on that date in recent years. By 21 March, net withdrawals had effectively ceased, and from 3 April, European storage as a whole moved into ‘net injection’ mode. On 19 April, European stocks surpassed those held on the same date a year earlier. A major difference year-on-year is the weather. Not only was European storage needed to compensate as LNG was pulled away to a cold North-Eastern Asia at the start of 2021, but in Europe the winter temperatures lingered into April. Indeed, European stocks on 1 May 2021 were 0.1 bcm lower than they had been on 1 April 2021,” the report says.
Where Europe effectively ‘lost’ April as a storage injection month in 2021, net injections in April 2022 totaled 7.6 bcm. Net injections in 1-18 May added a further 7.8 bcm to European stocks.
“Looking back to our analysis in the last Quarterly Gas Review, while the prediction that Europe would end the winter (1 April) with stocks lower than the year before proved to be correct, the extent to which end-of-winter stocks were lower year-on-year was nowhere near as great as we had feared. The rate of injection was sustained between mid-April and mid-May. To meet the European Commission target of European storage being 80 per cent full by 1 November, Europe will need to inject 37.5 bcm between 18 May and 1 November – This is 6.7 bcm less than was injected between 18 May and 1 November in 2021, when stocks on 1 November reached 79.7 bcm.”
---
Follow the author on Twitter: @Lyaman_Zeyn