The European Union should have sufficient gas stocks for the winter of 2024-2025. European storage sites closed the 2023/24 heating season at a record level, filled to 59%, which is expected to weigh on injection demand and thus could further ease market fundamentals during the gas summer. The EU would only need to inject 32 billion cubic meters (40% below the five-year average) to achieve its 90% filling target by November 1st.
These abundant levels place the EU in a comfortable starting position as it replenishes its storages during the summer, and analysts warn that the bloc may need to reduce its LNG imports in the coming months to prevent its capacities from filling up too early.
There is already evidence of this slowdown in American LNG imports by Europe for the month of March. Europe, which is the preferred destination for American gas, absorbed approximately 57%, or 4.33 MT, of the total exports in March. However, this represents a decrease from 60.5% of all shipments, or 4.62 million tonnes in February, according to LSEG data.
Nevetheless, The huge spread between gas prices in the United States and Europe means that Europe will remain an attractive destination for American gas. The reference price for TTF gas in Europe for the front month is currently about four times higher than the equivalent contract in the United States.
Overall, Europe’s LNG imports fell to 9.12 million tonnes in March, a 20% drop compared to the previous year, and their lowest level since September 2023, due to warmer weather and high gas reserves.
Furthermore, the EU continued to accelerate its transition to clean energy by deploying a record 73 GW of renewable energy in 2023, which replaced around 13 billion cubic meters of gas imports.
Regarding the demand reduction, the EU Council officially adopted a recommendation on March 25th encouraging Member States to continue reducing their gas consumption by at least 15% until the end of March 2025. For industrial gas demand, Tomas Marzec-Manser, head of gas analysis at data provider ICIS, expects this year’s industrial gas demand to remain 20% below pre-pandemic levels.
Exports from Europe’s largest gas exporter, Norway, remain robust. Norwegian gas pipeline exports stayed at the top of the five-year range in March, according to an analysis by S&P Global. Deliveries reached 10.2 billion cubic meters last month, up 5% from the previous year, with exports only affected by short, unexpected interruptions at the Aasta Hansteen gas field and the Karsto, Kollsnes, and Nyhamna processing plants.
For the first quarter, deliveries increased by 6% compared to the previous year, reaching 30 billion cubic meters, according to the data. According to the Norwegian Maritime Authority, Norwegian gas production is estimated production for 2024 at119.9 billion cubic meters, this represents an increase from 116 billion cubic meters last year.
Source: Vincent Barret
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