Europe accelerates collection of natural gas with price at record high

Europe accelerates collection of natural gas with price at record high

The slogan in Brussels and the other major European capitals is clear: in anticipation of the busiest winter on record, replenishing reserves is non-negotiable. And it is, no matter what the cost, without the price of this fuel – at historic highs – acting as a deterrent; Security of supply no longer has a price. Taking advantage of lower consumption over the summer, the Twenty-Seven have accelerated injections into their underground storage facilities in recent weeks, leapfrogging closer to the Community target and increasing competition with Asia for the increasingly scarce ship-borne methane supply contracts available around the world.

The European Commission’s roadmap, which is binding for all countries in the club, stipulates that gas reserves will exceed the 80% threshold on November 1st, when the cold season begins in the central and northern parts of the Union. And given the latest figures from Gas Infrastructure Europe (the association representing gas infrastructure operators on the old continent), there is still a long way to go before the target is smashed: in two and a half months, the continental gas reserves are already at almost 76%, with eight states – Spain, Belgium, Czech Republic, Denmark, France, Sweden, Poland and Portugal (the last two at practically 100%) – already exceeding the magic number of the municipal board.

Europe’s renewed desire to add more and more gas to its reserves has led to a sharp increase in shipments by pipe from alternative traditional exporters to Russia – such as Norway, Azerbaijan or Algeria – and raised disputes with other major buyers such as Japan, China or South Korea , the three major global magnets for liquefied natural gas (LNG, which arrives by sea).

This battle for the contracts of methane carriers from the US, Qatar, Australia or Nigeria also helps trigger the price of this fuel in the EU, which, far from following the downward trend of its older brother oil, continues to beat records. The only positive on this page: the slowdown in the Chinese economy promises some easing of strength, which would free up valuable leeway for Europe to exploit.

“Gas storage has been much better than expected thanks to record LNG imports,” explains Pedro Cantuel, an analyst at Ignis Energía, over the phone. Terminals in France, the Netherlands, Belgium and Italy have been “fully utilized at an unprecedented level” in recent months. In parallel, Norway has become Germany’s leading gas supplier, partly supplying Russia’s brutal cuts to the main gas pipeline connecting it to Europe’s locomotive – the Nord Stream 1 – which is operating at a fifth of its capacity by the labor and grace of Wladimir Putin.

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So much for the good news: the problem is that while the snapshot of reserves in the Old Continent is significantly better than expected, the cushion they offer is small compared to the magnitude that could come if Russia finally cuts gas closes knock. If that happens, Cantuel explains, there will be problems in countries like Germany, on which all eyes are on, no matter what the level of storage that has been achieved in these months. “The market reflects that,” he claims.

Several ships in front of the LNG import terminal in the port of Rotterdam (Netherlands).Several ships in front of the LNG import terminal in the port of Rotterdam, Netherlands.Ben Kilb (Bloomberg)

Germany in the eye of the storm

The German state’s energy regulator warned this week that even if the national target of 85% were met in October and 95% in November, that amount would only be enough to cover a maximum of two and a half months of consumption. , between industry, heat and power generation. “We drive a little faster than usual when refueling, but we can’t sit back: On the contrary, that must be seen as an incentive to keep going,” said the President of the Federal Network Agency, Klaus Müller. Despite being two weeks ahead of its own original calendar, an early drop in temperatures could wipe out this gained advantage. “I cannot promise that 95 percent will be achieved in November,” said Müller.

Germany, which entered the energy crisis without a single regasification plant – the infrastructure necessary to process fuel arriving by ship – plans to have at least two floating plants ready this winter. That would give them some leeway for the coming months as they could import gas from anywhere in the world. “But the problem is that the market doesn’t believe it, hence the development that sees the TTF [el mercado holandés, la principal referencia de esta energía fósil en el Viejo Continente, que ha batido varios récords en las últimas jornadas]’ Cantuel emphasizes. “What those prices are saying is you’re going to have a hard time and you need to cut your gas use by 20% or 25%. If not, it depends on the solidarity of other neighboring countries: Poland, Holland, Belgium…”.

Outside of Germany, the highest alert is in the smaller countries of the eastern EU. Among the big ones, Italy is also a cause for concern – a large consumer of gas for power generation given the light weight of renewables and the lack of nuclear power. However, unlike the leading European economy, the transalpine nation has significant regasification capacity and has agreed with Algeria to increase gas transport via pipeline. “Spain, France and the UK are well covered; The biggest focus is on Germany: when you activate level 3 at the end [de alerta: ahora está en el 2], many non-essential industries will experience power outages. That is why so many German companies are buying at any price, which in turn greatly increases costs in Central and Northern Europe,” notes the analyst from Ignis Energía.

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