Europe is more or less ready to face this winter, the natural gas storage facilities are almost full, and the import of liquefied natural gas (LNG) is also very stable. Executives of several of Europe's largest oil and gas giants said the real concern is the supply of natural gas in the subsequent winter.
According to data from European Natural Gas Infrastructure Company, as of October 31, the natural gas storage sites in Europe had reached 95% and the storage sites in Germany had reached 99%.
Comfortable storage levels, high LNG import rates, and mild weather in October and early November have alleviated concerns about a balance between natural gas supply and demand in the early heating season. In fact, mild weather in most parts of Europe delayed the start of the heating season, giving countries the opportunity to stockpile more gas, while demand for gas for heating is also declining – for now.
benchmark gas prices at the Dutch TTF centre have fallen this week, staying below $99 per megawatt-hour (100 euro ) as the warm October allows more gas to be injected into storage rather than extraction. In Germany, for example, the Federal Network Office said warm weather since early October helped industries and households save 22% and 26% of gas consumption, respectively, compared with the average from 2018 to 2021. The regulator will implement quantitative rations if necessary.
analysts believe that Europe will continue to see large amounts of LNG imports, as rapid epidemic lockdowns across Asia will weaken demand there. "The latest round of epidemic restrictions in Asia and the decline in overall demand in Asia should keep European LNG imports strong, which should ensure record levels of purchases entering northwest Europe and the UK continue."
However, the sharp drop in Russian gas supply this year only occurred in June, which means that Europe can still stockpile some Russian gas earlier this year.
Before the winter of 2023/2024, if there were no Russian natural gas, the gap in natural gas in Europe would be even larger. Europe will not import Russian gas in large quantities—If Russia cuts off the only still-operated pipeline through Ukraine and TurkStream, Europe will not import Russian gas at all—in contrast, natural gas imports from Russia in the first half of this year were relatively stable, followed by a gradual reduction in exports through the Nord Stream pipeline in June, until the pipeline was closed in early September.
European oil giants BP (BP) and Eni Group (Eni) also believe that Europe will face much greater difficulties next winter.
BP CEO Bernard Looney said at a panel discussion at the ADIPEC Energy Conference held in Abu Dhabi this week: "I think this problem has solved this winter." He said at the panel discussion: "I think many of us are worried that may face a bigger challenge in Europe next winter ."
Italy Eni CEO Claudio "We are in good shape and can handle this winter ," Descalzi said at the same panel. He added: "But as we said, the problem is not this winter, but the next winter, because next year we will not get Russian gas — a 98% reduction, maybe nothing."
Russell, CEO of Vitol, the world's largest independent oil trader, Hardy pointed out: "We will face a difficult winter, and in the year after that we will face a more difficult winter, as the output available in Europe in the first half of 2023 is much lower than in the first half of 2022."
According to the latest "2022/23 Winter Supply Outlook" released by European ENTSOG, the natural gas system can ensure adequate supply and demand if winter is normal this year. But in winter colder than normal, all European countries are at risk of reducing demand by 10% throughout the winter, and if it is a peak day, it will be reduced by 10% to 27% .
The outlook also states that it is crucial to prepare for the winter of 2023/2024 and that natural gas injections should be maximized as long as possible should be maximized as possible.
Outlook says: "If the supply safety of the next natural gas year cannot be predicted, may cause natural gas storage to be exhausted at the end of winter and make unsupplemented next summer."
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