I wrote the other day about the concern that Europe’s LNG (liquefied natural gas) reserves are lower than they should be at this time of year:
Europe’s LNG storage tanks are only about 50 percent full, a very low level at a time when it needs to be preparing for winter. Wood Mackenzie, an energy consultancy, is forecasting that they will only be 75 percent full when winter begins, compared with a five-year average of 90 percent. Goldman Sachs is also warning that Europe may be cutting it fine. In the event of an average winter, its storage facilities will probably only be about a quarter full by late March. That is almost certain to mean higher prices ahead, which will likely further sour the continent’s economic and political outlook.
The EU is now coming out with superficially reassuring statements, but they don’t stand up to closer inspection. Brussels is stressing that it has plenty of import capacity, which it does, and is a considerable improvement on the position before 2022, but that LNG has to come from somewhere.
As I noted:
LNG’s transportability means it can help out Europe but this quality comes with a catch. Europe was not the only part of the world chasing after LNG in 2022, and it is not the only part to do so now. LNG transported through the Strait of Hormuz accounted for around 27 percent of Asia’s total LNG imports. Overall, about 90 percent of the LNG transported through the strait goes to Asia, with almost all the rest going to Europe.
The EU’s storage facilities are only around 57% full, the lowest for this time of year in records going back to 2009. European LNG imports have been dropping since April, with about a fifth of global LNG supply disrupted by the war, while Asian buyers snap up available cargoes.
That’s higher than the 50 percent I mentioned before. The explanation may be the arrival of new data or (perhaps) the difference between EU and “European” reserves, but, either way, the fact that the gas tanks are the lowest for this time of year since 2009 is not hugely reassuring.
Meanwhile, via High North News:
The European Union has eased planned restrictions on Russian liquefied natural gas (LNG) by allowing European companies to continue transporting and purchasing Russian LNG to buyers outside the bloc after Jan. 1, 2027.
The exemptions, adopted as part of the EU’s 21st sanctions package, mark the first significant rollback of the bloc’s Russian LNG sanctions and provide an important lifeline to Russia’s Yamal LNG
To be clear, that still keeps a ban on EU imports of LNG from the beginning of the new year. But Brussels, mainly throwing a bone to Greek shippers, I think, is allowing EU-registered vessels to transport Russian LNG and, indeed, for it to be stored in the EU.
But for now, prompted partly by fears of a supply squeeze, EU buyers have been heavy buyers of Russian LNG.
BRUSSELS, July 13 (Reuters) — European Union countries imported record-high volumes of liquefied natural gas from Russia’s Yamal facility in the first half of this year, EU data showed on Monday, ahead of a ban on Russian supplies that will take effect next year.
The EU from April banned Russian LNG imports under short-term contracts, but imports under long-term contracts can continue until January 1, 2027.
Not a great look.