European Gas Stocks At Lowest Level: GIE

There was less gas in European storage at the start of this injection season (April 1) than at any time in the last five years, with just 18% of the capacity filled, and only 2% in some countries, according to Gas Infrastructure Europe April 19.

But despite that, only some storage facilities have started gas injection in preparation for the next season, and the seasonal spreads – the difference between the price of gas now, and the price of gas next winter – do not encourage market participants to build up stocks, it said.

GIE board member Lubor Veleba said:“Shippers usually refer to the futures seasonal price spread to make their purchasing decision whereas this metric fails to reflect the full value of gas storage.” In the future, these services and similar fill levels can be guaranteed only if storage site operators are remunerated and the full value of gas storage is recognised, said GIE.

This value includes intra-seasonal price volatility, where traders can buy gas for injecting during the winter at times of low demand and hope for a squeeze driving prices up soon after.

Commenting on the past winter, with its supply and transmission shocks  and the exceptional cold, it said that the "resilience of the European gas markets has been proven." It said early warning status was declared in three European countries – Italy, Denmark and Sweden – this winter, "but thanks to the well-functioning co-operation between the transmission system operators, increased send-out from LNG terminals as well as the availability of sufficient gas storage fill levels, some countries avoided even tighter supply situation and the declaration of the real emergency."

GIE President Jean-Marc Leroy said: “This year again, Europe passed the recent cold spells successfully thanks to the reliability of gas infrastructure operators. The EU internal gas market worked well and the gas flowed where it was needed.”

With the giant Rough storage out of action in the UK permanently and Groningen down in the Netherlands, also permanently, Europe's spot prices were highest at the UK and Dutch hubs, with day-ahead hitting €88/MWh and €79/MWh respectively March 1.

In Italy, where unexpected events occurred this winter, the Italian market continued to supply customers throughout the period, which is sign of resilience of the network and ability to withstand serious short-term emergency. Even in the case of the accident at Baumgarten, gas storage in Austria and Italy was the key provider of flexibility in their home markets whereas Baumgarten quickly resumed its service as a major transit point for Russian gas to Italy, said GIE.