Europe potentially exits winter with record gas storage

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to RBC on the dynamics of gas reserves in the EU UGS during the heating period 2023/2024 and the prospects for gas demand in the EU in 2024:

"The March warming had a strong impact on the dynamics of reserves: from March 1 to March 24, the reduction of reserves in the EU UGS turned out to be 38.7% less than a year earlier. As a result, in general, for the entire heating period (excluding the last week of March), the decrease in stocks by only 6% exceeded last year's figure. And taking into account their higher level at the beginning of the heating period, stocks as of April 1 will clearly exceed last year's value."

"Such a high level of reserves at the end of the heating period (it is quite normal to reduce them to 25-30%) ensures almost painless preparation for the next winter with minimal risks to gas supply in the summer. Stock prices are likely to drop seasonally in the second quarter and only rise slightly in the third. The average annual spot price for TTF in 2024 will almost certainly drop to $300 or even lower."

"High reserves in UGS negatively affect gas imports, including Russian gas. But still, this is not the key factor. So far, Russian pipeline supplies to the EU and the Balkan countries are stable. In 2023, they amounted, according to ENTSOG (European Network of Transmission System Operators for Gas. — RBC), to 24 billion cubic meters. In 2024, in the baseline scenario, they will decrease to 22-23 billion cubic meters. m. The main uncertainty is related to 2025: while maintaining Ukrainian transit in the form of short-term booking of Ukrainian GTS capacities, supplies will drop up to about 18-20 billion cubic meters. But if Ukraine completely stops transit, then it remains to rely only on transit through Turkey and Bulgaria, and this is a maximum of 14-15 billion cubic meters per year."