EU is not on track to meet 90% of gas storage requirements before winter

The European Energy Regulators' Agency ACER warned on Thursday that the Iran 'war' will disrupt global fuel markets and cause European Union countries to fall short of their requirement to fill up gas storage to 90% of its capacity by next winter.

ACER stated that countries should be allowed to achieve a filling level of 80% or less if market conditions are difficult. This flexibility is permitted by EU regulations. ACER said that this level would "likely come at a premium cost" and make the country more vulnerable to disruptions in supply.

ACER stated that to fill storage up to 90%, the EU would have to increase LNG imports 13% from 2025. This will be difficult, given the tight supply of LNG in the world. The Iran War has shattered global gas markets, by closing the Strait of Hormuz. This is where around 20% of liquefied gas in the world usually passes through. The damage caused by Iranian attacks on Qatar's gas infrastructure will take Qatar years to repair.

The EU imports most of its gas from Norway and the U.S., but the global supply disruption has forced European buyers into a competition with Asian buyers for flexible LNG cargoes. This has increased European gas prices around 40%.

After a particularly cold winter, Europe's gas reserves are at an unusually low level. Companies are hesitant to buy gas for storage because of the current high prices.

Gas Infrastructure Europe data shows that EU gas storage is currently 31% full. This is the lowest level since 2022 when Russia cut gas supplies to Europe.

Gas in storage typically covers up to one-third of EU gas consumption during winter. The European Commission has asked 'governments to begin filling up gas storage as soon as possible and announced?on Tuesday that it would step in to coordinate efforts so as to prevent countries from rushing to purchase gas at the same moment and causing price spikes. (Reporting and editing by Kate Abnett)

(source: Reuters)