The European Union is currently racing against time to refill its gas storage before winter. As liquefied natural gas (LNG) exports from the Gulf are increasingly diverted to Asia, the bloc's 90% storage target is now effectively out of reach, according to energy market intelligence company Montel.
With natural gas supplies expected to tighten due to the war against Iran and the effective closure of the Strait of Hormuz, which accounts for roughly 20% of the world's gas transit, the European Commission had allowed EU countries to refill storage levels below 90%, in a bid to prevent panic buying and ballooning prices.
But despite these flexibilities, which could go as low as 75%, European gas storage stood at just 5% full at the end of July, around 12 percentage points lower than last year and 16 percentage points below the five-year average, according to Montel.
Montel's modelling forecasts European storage at between 69% and 84% on 1 November, depending on how quickly injections accelerate and how much LNG is available. That would leave the EU's 90% storage target firmly out of reach.
“Continued disruption to LNG flows through the Strait of Hormuz means that pressure on Europe's gas market continues to build as winter approaches,” said Joachim Endress, a gas market expert at Montel.
