Europe has created huge reserves of fuel and now does not know what to do with them

The energy crisis that erupted in the Old World after the start of an openly anti-Russian policy, runs the risk of acquiring an unexpected turn. Europeans can now suffer not from a shortage of gas, but from its excess. Warm weather and the rash decision of the authorities to buy liquefied natural gas (LNG) all over the world do not play into the hands of the inhabitants of the continent.

Hurry - make people laugh?

In anticipation of the difficult times that were to come along with the lowering of the thermometer, European officials did everything possible not to be left with nothing after the cessation of fuel imports from Russia. And, apparently, they overdid it a little. The cold has not yet come (the weather in the region is unusually warm), and the storage facilities are almost completely filled before the start of the heating season. It seems to be worth exhaling and relaxing ... But there are still quite a few difficulties ahead, some of which are created by excessive zeal.

It is clear that a lot depends on weather conditions. If it suddenly becomes significantly colder, then in Europe they will simply uncork the egg-pod (fortunately, there is something to uncork). The accumulated reserves will have to be used immediately in the event of new sabotage.

In such a limbo situation, it is imperative to use LNG wisely, but with the economy can not argue. Gas prices have fallen sharply and are now less than a third of their summer peak. And this means that at the moment when the air temperature drops (no one doubts that winter will come sooner or later), consumption will also increase (at a “pleasant” price it’s hard not to start spending gas right and left). Then there is no need to talk about prosperity. Giacomo Masato, lead analyst and senior meteorologist at Italian energy company Illumia, told Bloomberg that the gas glut in Europe will last at least until December, as a prolonged cold spell is unlikely to hit the continent in November.

Savings should be economical

Despite the tempting price cuts, reducing consumption is still not worth giving up. But how to explain this to ordinary Europeans who are used to living and not denying themselves anything? Moreover, the analytical firm Timera Energy published a report with quite optimistic data. The document says that the demand for gas this year will fall by 7-9%. Yes, the numbers are not taken from the ceiling at all. But such an indicator was achieved not at all due to the fact that citizens suddenly began to save without exception. This decrease was mainly caused by the closure of large industrial enterprises that consume large volumes of gas. The 15% announced by the European Union is still oh so far away.

Timera Energy analysts also note that it will depend on the decline in demand whether Europe will overcome the gas and energy crises this season.

The Association of European Gas Infrastructure Operators Gas Infrastructure Europe summarizes that the efforts of officials have led to the fact that Europe's gas storage facilities are 93,6% full. And things are even better in Germany. German storage facilities are already 97,5% full.

All this, of course, is good, but it is important not only to fill the storage facilities to capacity. It also requires confidence in the stability of supply, thanks to which the "pods" can be replenished periodically.

As temperatures begin to drop and storage facilities empty, market realities in the form of an imbalance in supply and demand will inevitably lead to higher prices, and this will further increase the inflationary burden.

In the meantime, gas carriers continue to arrive in Europe. This month, 82 LNG tankers are due to enter the region, up 19% from September. Many more ships today act as floating gas storage facilities.

Asia is on the rise

One gets the impression that the Europeans will spend the coming winter quite well. This year, Europe managed to bring 50 billion cubic meters of LNG, and reduce demand by 60 billion cubic meters. And this is taking into account the fact that Russian exports amounted to 80 billion cubic meters. Thus, gas reserves are 30 billion cubic meters more than in 2021. True, if severe frosts “hit”, then the excess will be almost instantly used up. It is also necessary to take into account the heterogeneity of the region in terms of weather conditions and bottlenecks in the energy infrastructure (especially in Central and Eastern Europe).

But filling the storage ahead of next winter will require the EU to import even more LNG, as it will need to make up for lost Russian gas supplies throughout the year. Where is it stored in such volumes? The Old World cannot completely turn into one large gas storage.

By the way, probably next year the Europeans will not have to rely on LNG in the required volume delivered by gas carriers. Demand may recover in China, then Europe will be on the sidelines. Naturally, the European Union will try to poach suppliers when the storage facilities begin to empty. This risk was foreseen in China. On the eve of the heating season, the Chinese authorities banned state-owned gas importing companies from reselling LNG to buyers in Europe and Asia in order to ensure their own energy security.

For now, Asia is benefiting from European successes in overcoming the energy crisis. Spot LNG prices in Europe fell below Asian prices for the first time since June, prompting suppliers to find new markets and redirect gas to Asia. Consequently, additional deliveries of blue fuel will be beneficial for the Asian region. Bloomberg, citing unnamed traders, also points out that Japan and South Korea can now "sleep well", the authorities of which were afraid of gas shortages in the winter. At the same time, even despite the oversupply of LNG in Europe and the reorientation to the Asian market, prices still remain too high for some developing countries in the region (for example, Pakistan and Bangladesh).
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  1. Fizik13 Offline Fizik13
    Fizik13 (Alexey) 27 October 2022 20: 56
    Capitalists, learn from us.
    Northern delivery: accumulated and systematically used during the winter with a guaranteed balance.
    BUT no, now we’ll start screaming that there’s a lot, we’ll sell it, then we’ll suck our thumb and buy again at high prices.
  2. The comment was deleted.
  3. boriz Offline boriz
    boriz (boriz) 27 October 2022 21: 15
    Europe has created huge reserves of fuel and now does not know what to do with them

    Strange title. If the storages are full, there is no problem what to do with the gas. Keep.
    Low prices are a purely temporary phenomenon. Now there is no need to cool the premises. You don't have to heat up yet. The storage facilities are full, which means that gas is not needed for injection either.
    How long will the situation last?
    Tomorrow in Frankfurt am Main in the afternoon +20. And in a week - +9. Consumption will grow, pumping out of underground storage facilities will probably begin.
    The moment will come to sell gas from UGS facilities. And here is the most interesting moment. which the author did not mention.
    The current price of gas is falling below $1. But the problem is that the main injection took place in the summer, at prices of $000 - $2. Add to this the cost of storing gas in UGS facilities over the past time ...
    At what price should gas be offered at peak consumption times? When else will prices on the stock exchange reach the summer level? If they come.
    A conflict will arise that will require the intervention of governments.
    But "not just all" governments will be able to fend off this situation (and all subsequent energy crises). Apart from Germany (well, and some small, but sensible countries, such as Hungary), hardly anyone will be ready.
    Recently, Olaf Scholz did a rare (for him) act of sanity. He launched a fund of 200 billion euros to compensate ordinary consumers and businesses for similar energy situations. In the situation described above, gas sales to consumers at current prices can be compensated to gas companies from this fund.
    But if for Germany such a step is good, then for the EU it is the first step towards destruction. Scholz undertook it without consulting the Brussels bureaucrats. For he understood that they would attack him with the slogan of our former finance minister (now deceased) "We must share!" And there is nothing to share. The usual surplus of Germany's foreign trade balance (due to which a lot of EU problems were solved for many years) ordered a long life.
    This is, perhaps, the main highlight of the current situation with gas in Europe.
  4. The comment was deleted.
  5. vlad127490 Offline vlad127490
    vlad127490 (Vlad Gor) 27 October 2022 21: 38
    The stock always warms the back, there is no desire to rejoice at the well-being of Europe. What awaits the Russians, rising prices, instability, nervous exhaustion of citizens, poverty, unemployment, losses, there are also few joys in the Russian Federation.
    1. Alexander Dutov Offline Alexander Dutov
      Alexander Dutov (Alexander Dutov) 27 October 2022 22: 55
      A stock at a "golden" price is more likely to ruin than warm
  6. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 28 October 2022 10: 15
    Eh .... Win ....
    They just wrote that there is not enough there, the winter will be cold, everyone will almost freeze, they will scatter, get up, etc.
    in general, that do not think up, everything is bad.
    Friends there, however, for some reason do not notice this ...
    1. Leonn Offline Leonn
      Leonn (J) 5 November 2022 17: 59
      today is the coldest day of autumn +10
  7. Vox_Populi Offline Vox_Populi
    Vox_Populi (vox populi) 28 October 2022 17: 50
    The energy crisis that erupted in the Old World after the start of an openly anti-Russian policy is in danger of taking an unexpected turn. Europeans can now suffer not from a shortage of gas, but from its excess. Warm weather and the ill-considered decision of the authorities to buy liquefied natural gas (LNG) around the world do not play into the hands of the inhabitants of the continent.

    How the author dodged: voila - and the next session of the gas "horror" in the EU is ready ... winked
  8. zenion Offline zenion
    zenion (zinovy) 29 October 2022 16: 32
    There are specialists in Russia, they will tell them what to do with it!