EU-wide gas stocks on track for Nov.1 target after July injections

Natural gas stocks in the EU ended July 69% full despite dwindling Russian flows, to be well on track to meet a new EU-wide target of 80% for Nov. 1 following the invasion of Ukraine.

Gas tanks across the EU contained 73 Bcm on July 31, which was 13 Bcm higher year on year and 1% below the five-year average, the smallest gap since the start of 2022, according to GIE AGSI data.

A newly adopted EU regulation in the wake of Russia’s invasion of Ukraine calls for gas storage sites to be filled to at least 80% of capacity by Nov. 1, 2022, and to 90% by Nov. 1 in subsequent years.

With a total storage capacity of 105 Bcm, according to the latest estimate from GIE AGSI, EU gas markets will need to inject just 125 million cu m/d by the end of October to meet the EU-wide gas target, according to calculations by S&P Global Commodity Insights.

If net injection rates remained at July’s level, the target could be met before the end of August.

The EU-wide gas target of storage being 80% full by Nov. 1 was now “pretty doable but will come at the cost of high prices,” one European gas trader said.

“70% [full] is good, but [it is] in the wrong places,” one European gas trader said, adding: “Look how full France is. No wonder it is trading Eur70/MWh ($71/MWh) below TTF.”

French gas tanks, which have benefited from an influx of LNG cargoes throughout 2022, were 79% full on July 31, the GIE AGSI data showed.

That was reflected in the French PEG day-ahead price being assessed by Platts at Eur113.85/MWh on Aug. 1, a Eur84.525/MWh discount to TTF.

In contrast, German tanks were 69% full on July 31, with 16 Bcm.

But Germany “will inject even if prices are at [Eur]300[/MWh], so tightness will continue until they are done,” a European trader said.

The German THE day-ahead price was assessed by Platts at Eur198.7/MWh on Aug. 1, marking a 32.5 euro cent/MWh premium to its Dutch TTF equivalent.Net injections defy supply crunch

Net gas storage injections in the EU averaged 381 million cu m/d in July, according to GIE AGSI, continuing their recent strong performance streak and standing 21% higher on the year and some 15% above the five-year average.

Still, successive curtailments of Russian gas inflows to Europe hit July storage injections rates, which were 18% lower than their recent peak in May.

Within July, net gas stock injections picked up during the last week to average 394 million cu m/d, according to GIE AGSI data, some 13% higher on the week.

Looking ahead, key factors to watch will remain not just curtailed Russian gas flows through the 55 Bcm/year Nord Stream pipeline, but also on whether strong LNG and Norwegian pipeline gas flows can be sustained.
Source: Platts