​On the eve of winter, the situation with natural gas at the EU level is unexpectedly good, exceeding all expectations. Gas stocks in Europe have reached record levels and continue to rise, with consumption remaining low amid fairly warm temperatures for the period. Record inventories have pushed prices down, largely unaffected by the Middle East war between Israel and Hamas.

How full are the gas tanks

According to Gas Infrastructure Europe, 1,135 TWh were stored at the EU level on November 6, which means that storage capacity is 99.62%.

This amount is about a third of the annual consumption in the EU.

In Romania, 34.9 TWh were accumulated, which means a degree of filling of 103.1%. Practically, Romania exceeded the storage capacity by 3.1%, but this represents the available technical reserve at the warehouse level.

And in the case of Romania, the amount in warehouses is about a third of the annual consumption.

Full warehouses drag prices down

On the gas exchange in Amsterdam, where reference prices for Europe are set, quotations have been trending downward for more than a week. Next-month quotes fell to €46/MWh on November 7 from over €50/MWh at the end of October. For comparison, last year in the same period they amounted to about 123 euros/MWh.

Quotations for January 2024 are also low at €47.4/MWh, and for February 2024 at €47.9/MWh.

Europe has not yet reached the level of prices before the pandemic and the war in Ukraine

Reserves are 189 TWh, which is 20% higher than the seasonal average for the past 10 years, Reuters writes. Even with record stocks, prices have not yet fallen enough to reach pre-pandemic levels and Russia’s invasion of Ukraine.

Quotations for the coming months are 2.5 times higher than the five-year average of 2016-2020. But they are 2.5 times lower than a year ago. The highest prices were recorded in August 2022, when they reached around 300 EUR/MWh.

Gas is also starting to be stored outside the EU or on LNG platforms

As storage facilities are full, European energy companies are looking to Ukraine as an alternative to store excess gas, as well as other options.

Other companies pay for liquefied natural gas (LNG) tankers to act as “floating depots” at sea.

Ukraine has become an alternative for storage despite the risks of a Russian invasion, in part because it has offered incentives such as cheap storage tariffs and a three-year exemption from customs duties, making it easy to reimport gas into the EU.

The deposits of Ukraine are mostly located deep underground in the west of the country, far from the front line.

The Ukrainian company “Naftogaz” offered foreign partners for storage more than 10 billion cubic meters, which is a third of the country’s national capacity.

Photo source: Artur Widak/NurPhoto/Shutterstock Editorial/Profimedia