Europe is scrambling to fill its underground gas storage ahead of the winter. Gas utilities fill reserves over the summer when, hopefully, they can buy less expensive gas and then draw from those reserves over the winter as heating demand rises. The current reductions will make refilling storage more difficult and expensive, APA reports citing Gas Infrastructure Europe.
Diminishing energy supplies has brought closer the specter of a complete Russian gas shutoff that would make it impossible for Europe to get all the fuel it needs for next winter. Natural gas is used by several energy-intensive industries that are already facing higher costs and dialing back consumption, which has contributed to a slowing European economy.
Right now, Europe’s underground storage caverns are 60% full. The European Commission’s latest proposal is for each country to reach 80% by Nov. 1.
Economists Holger Schmieding and Salomon Fiedler at Berenberg bank say that if Russian does not resume deliveries through Nord Stream 1 after July 24, the EU “would likely be running on empty at the end of winter. To be on the safe side, some rationing of gas would likely set in beforehand."
On top of all that, an explosion and fire at an export terminal in Freeport, Texas, took a fifth of U.S. export capacity offline for months sending another shudder through the gas market. Most of the terminal’s exports were going to Europe, Rystad Energy said.