Analysts at Standard Chartered say gas storage in Europe is filling despite significantly lower Russian pipeline supplies this year, weakening the power of Vladimir Putin’s “gas arsenal” against the EU.
“It seemed inconceivable that Europe could get through the winter comfortably without Russian gas, but thanks to the strength of the inventory build, we now think it’s possible,” analysts said in a Tuesday note. Bloomberg. “The power of Russia’s air ‘weapon’ has significantly diminished,” the bank’s strategist says.
According to Standard Chartered, the pace of gas storage in Europe this summer is some nine weeks ahead of the pace of injection into storage last year.
Europe started the 2021/2022 winter heating season with gas below seasonal norms.
Russia said last month that gas supplies through Nord Stream would be reduced to just 20% of the pipeline’s capacity, days after Gazprom restarted the pipeline at 40% capacity following a 10-day routine maintenance. The Russian explanation for further reduced gas flows to Europe was that another turbine at the compressor station had been sent for repairs, while the turbine returned by Canada for repairs had yet to be returned and installed.
According to Standard Chartered analysts, despite lower levels of Russian deliveries via Nord Stream, EU gas inventories “are still relatively strong.”
The bank predicts that even if Russia shuts off all gas flows to Europe, the injection season in Europe will end with enough gas storage to provide “adequate insulation”.
Data from Gas Infrastructure Europe shows That as of August 9, EU gas storage was 72.4% full, Germany’s storage was only 73% full, as Europe is bringing in record amounts of LNG from the United States and other suppliers to replace Russian pipeline gas.
Despite rising gas stocks, industries in Europe, including its biggest economy, Germany, are warning they may have to cut output amid a gas crisis, which could collapse supply and production chains.
By Tsvetana Paraskova for Oilprice.com
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