After a few days of relative calm, the tension in the gas market is increasing again. Gazprom has meanwhile sharply reduced supplies to the EU. The European stock building targets for the coming winter are therefore becoming increasingly difficult to achieve.
The quotation for natural gas on the TTF seemed to stabilize at a level of around €130 per MWh. The Nord Stream pipeline has only been used at 40% for several weeks now. According to analysts, these problems have been incorporated into the listing on the TTF with the large price jump that started in mid-June. It is therefore surprising that the gas market is taking another step up today (Wednesday, June 29) and is at €138,50 at the time of writing this article.
Germany and Italy are the largest buyers of Russian gas in the EU. The filling level of these countries is currently about 60%. Due to the reduced supply from Russia, it could be quite a challenge to get the storages filled to 90% in October, which is the European target.
Border in sight
The supply of LNG is going well, but the EU is reaching capacity limits. 54 billion cubic meters of LNG were imported in the first five months of this year, according to data from Rystad Energy. That is 50% more compared to the same period last year. The Commission's REPowerEU plan sets a target for an additional 50 billion cubic meters of LNG to be imported by the second half of this year. That seems realistic, but in the first half of this year about 11 billion cubic meters came from Russia. In addition, the internal infrastructure is reaching its limits. Spain is an important supply port, but transporting gas further into the EU is stalling. On the other hand, temporary mobile terminals are being built in the Netherlands, for example, which must be operational before the winter.
The uncertainty in the oil and gas market is not over yet. Ben van Beurden, CEO of Shell, warned about this. "I think we will have quite a bit of uncertainty for the foreseeable future," Van Beurden told Reuters. "The spare capacity is very, very small." According to the CEO, it is impossible to replace the total gas supply through the pipeline from Russia with LNG. "If we don't take drastic measures, such as energy savings or perhaps a certain amount of rationing, it will become problematic."