Axpo: Europe will have to compete with Asia for gas to fill its storage facilities this year

With the end of Russian gas transit through Ukraine and cold weather at the end of last year, gas storage facilities in Europe are being depleted faster than in previous years. Demand for gas to fill storage facilities in Europe ahead of next winter is therefore likely to be strong this summer. According to Swiss energy company Axpo, European traders will have to compete more with Asian companies on the global market for liquefied natural gas (LNG).

The question of Europe’s natural gas supplies has once again been widely discussed in recent months, particularly in connection with the end of Russian gas transit through Ukraine. Since the start of the year, Russian gas has flowed into Europe through pipelines only via the southern route through Turkey, specifically the TurkStream pipeline. Europe is therefore more dependent than ever on imports of liquefied natural gas, for which it must compete on the global market.

According to Swiss company Axpo, European traders will have to compete more intensely for gas with their Asian counterparts. In its market outlook, the company said, according to S&P Global, that the cold end to 2024, together with weaker deliveries of liquefied natural gas, had pushed gas stocks in Europe’s underground storage facilities below the five-year average.

"This decline, together with unplanned outages at major suppliers, is forcing Europe to intensify its competition with Asia on the global LNG market to secure large volumes of LNG imports and meet its official target of filling storage facilities to 90% of capacity by November 2025," the company said.

Gas storage facilities in Europe are currently about 65% full, similar to levels in mid-January 2021. In 2021, low storage levels caused a sharp rise in natural gas prices, as Russian gas giant Gazprom did not fill European storage facilities for which it had booked capacity.

Since mid-2022, however, the EU has required storage facilities to be filled to 90% by the start of November. This measure is intended to ensure that Europe’s gas systems are prepared for the winter period.