European storage 60.3% full in tight market

Europe's storage facilities were on average just 60.3% full as of August 11, according to data from Gas Infrastructure Europe. With the injection season normally ending around mid October, that leaves two months before the final tally is known. But the stocks are less than the average at this date, which raises demand for summer gas. Even at today's prices, however, gas is likely to be cheaper than during peak demand this coming winter.

The gas market has been very tight this year with Asian spot prices for LNG being high enough to draw cargoes away from Europe. There have also been production constraints in Europe owing to planned and unplanned outages.

As a result, the price of gas – for delivery over a prolonged period rather than a one-off spike on fundamentals – has set new records. The Dutch hub TTF was assessed at just under €46/MWh for delivery from September until the end of this year, dropping a couple of euros in Q1 2022. That decline is perhaps on expectations that Nord Stream 2 will be contributing positively to the European gas supply picture by then.

With prompt gas more expensive than is currently assessed during the peak demand of Q1 2022, there is little incentive to buy prompt gas for storage. Even next summer is still high, at €28/MWh - - about two thirds the Q1 2022 price.

While the average is 60.3%, there is a wide variation. Countries with regulatory incentives for booking injection capacity, or where governments control the market in some other way, tend to be at the top of the range. France is at 69%, Hungary at 73%, Italy is at 77% and Poland is 85%.

At the lower end is the continent's largest market, Germany, at 54%; while the former peak gas exporter, the Netherlands, is only 40.5% full. Being, like the UK once, a major gas producer, there is very high domestic gas penetration. Austria is also only 40% full.

Ukraine is at 41.15%, according to GIE data, but the total capacity is about 31bn m³. State Naftogaz Ukrainy has said that it reached its own injection objectives some 10 weeks ahead of the government's schedule with 17bn m³, which is more than 41% of the total capacity. It is assuming the gas in store will be used at home, although some of it belongs to foreign traders. They can use Ukraine's facilities attracted by favourable terms on import/export duty.