Europe is entering winter with the lowest recorded levels of natural gas reserves, leaving it with limited safety margins in case temperatures drop below expectations, while gas prices are experiencing a sharp rise amid the ongoing war in Iran, according to the Financial Times.
While the European Commission excludes the possibility of an immediate supply shortage, experts warn that a combination of factors such as a severe cold snap, supply disruptions, or reduced electricity generation from renewable energy sources could exacerbate the crisis.
The newspaper pointed out that the filling ratio of European gas reserves has reached only 65.6%, significantly lower than usual levels for this time of year, representing the lowest recorded level for this period since data collection began 15 years ago, according to the Aggregated Gas Storage Inventory database.
These low storage levels come at a time when gas prices in Europe have surged by more than 75% over the past two months, reaching their highest levels in three years this week.
As the war in Iran enters its seventh month, resulting in a squeeze on global gas supplies, European countries are rushing to refill their stocks in preparation for winter.
Lucy Post, head of Gas Infrastructure Europe, stated in remarks to the newspaper on Wednesday: "If we face a compound shock, it will be problematic."
She added that market disruptions, such as natural gas supply outages, a very cold winter, or lower electricity production from renewable sources could increase pressures on the European gas market.
Gas storage groups in Germany and the Netherlands have indicated that they will not be able to meet national storage targets of 70% and 80%, respectively.
However, the picture varies significantly among EU countries, with Italy, France, and Spain having a relatively better situation regarding storage levels.
For his part, Hubert Feigenbauer, the current CEO of the Swiss energy group MET Group, stated that Europe is also losing available time to inject gas into storage facilities, given the limited speed at which facilities across the region can be filled.
Feigenbauer added: "The reality is not about how much gas you can obtain, but how much gas can be pumped," noting that transporting gas to storage facilities can only occur at a specific rate.
The Dutch company Gasunie warned that the country would not meet its gas storage target before winter, while several European countries are facing declines in reserves due to supply disruptions.
The Financial Times reported that high gas prices during the summer, arising from continued supply losses from the Gulf region, led companies to avoid storing gas during the warmer months, aiming instead to build reserves to tackle any supply disruptions during winter.
Stored gas typically covers about one-third of Europe's gas consumption during winter, while the remaining portion comes from pipelines and liquefied natural gas (LNG) shipments.
Europe's efforts to boost its reserves could drive global gas prices up, but analysts rule out an actual shortage in supplies.
Gas prices remain much lower than the record levels reached in 2022 following the Russian invasion of Ukraine.
Anne Sophie Corbo, a gas expert at the Center on Global Energy Policy at Columbia University, stated: "I think we need to be very cautious and not feel overly secure, as we have seen repeatedly that when problems arise, they all come at once."
In contrast, the European Commission noted that "there are no immediate concerns about supplies," pointing out that gas consumption in Europe has decreased by 17% in recent years due to increased reliance on renewable energy and a decline in industrial demand.
The El Niño climate phenomenon is also expected to contribute to milder weather in the region this winter, which could ease demand pressures for gas during the colder months.
El Niño is a climatic phenomenon associated with the warming of the ocean surface in the central and eastern Pacific, occurring every two to seven years and lasting from nine months to twelve months.
However, this factor does not eliminate the risks associated with low storage levels, especially if weather conditions turn colder than expected or global supplies face additional disruptions.
The Dutch company Gasunie warned that the country would not achieve its gas storage target before winter, while several European countries are experiencing declines in reserves due to supply disruptions.
Last month, the Dutch company Gasunie, which operates the energy network, stated that the Netherlands "is not sufficiently prepared" to face a harsh winter.
In an unprecedented step, the Dutch government will provide one billion euros to enable the state-owned company Energie Beheer Nederland to fill storage facilities this year and in 2027. A spokesperson for the Dutch government stated: "We are more concerned about prices than supplies."
Experts from member states and the European Commission met on Thursday to discuss gas storage levels in preparation for winter, but they said they would not intervene despite describing the market situation as "exceptional."
According to the Financial Times, the UK has very limited gas storage capacity and relies on imports via pipelines and LNG shipments to meet its gas needs during the colder months.