Gas supplies in Europe suggest a plentiful supply for next winter

According to analysts and businesses, the European Union will have an abundance of gas on hand for the upcoming winter, and the remaining purchasers of Russian pipeline gas in central Europe are preparing for alternative imports in the event that transit via Ukraine is discontinued in January.

Due to warm weather and strong renewable power generation, gas consumption has been controlled and less gas has required to be removed from storage, resulting in a three-year low in February for European gas prices. These prices are comparable to those experienced before Russia's invasion of Ukraine in February of this year.

But a 2019 agreement between Russia's Gazprom and Ukraine's Naftogaz enabling Russian gas to flow via Ukraine is scheduled to expire at the end of the year, causing new worries about possible interruptions to the gas supply in Europe.

Although it's unclear if it would provide a loophole whereby European corporations might book the transit capacity themselves bypassing a direct arrangement between Russia and Ukraine, Ukraine announced earlier this month that it does not aim to prolong the deal.

Europe's gas reserves are 59% full, a record high for this time of year, with only a few days remaining until the winter gas season ends on March 31, according to statistics from Gas Infrastructure Europe.

Europe's gas storage facilities must be 90% filled by November 1st in accordance with EU regulations issued in the wake of Russia's invasion of Ukraine.

Due to strong stock levels, Europe should be well-positioned to satisfy demand for gas next winter and prevent any price shocks. Gas stored in storage normally makes up roughly 25% of Europe's winter gas usage, where it is a primary heating fuel.

The EU's most at risk nations are Slovakia and Austria, who still import a significant portion of their gas from Russia through Ukraine, despite their claims to be exploring other sources of supply to lessen the effects of a supply disruption.

(Sources: investing.com, reuters.com)