EU Gas Reserves at 12-Year High... "Opportunity for 탈Russia"

EU Gas Reserves at 56%... Expected to Reach 90% by July
Increased Russian Imports Last Year and Warm Weather Reduce Demand

The European Union (EU) has recorded its highest level of natural gas reserves in 12 years. This is due to a significant increase in gas imports from Russia and reduced demand caused by mild weather last winter. While some in Europe argue that this is an opportunity to cut off gas imports from Russia, which has weaponized energy, the paradox is that Russia is a major contributor to the expansion of gas reserves, making it realistically difficult.

[Image source=Reuters Yonhap News]

According to Gas Infrastructure Europe (GIE) on the 19th, the EU's gas reserves reached 55.7% of storage capacity at the beginning of this month. This is the highest level since 2011 for early April.

This level is more than 20 percentage points higher compared to the average of the previous five years. The EU's gas reserves have continued to increase, reaching 56.5% as of mid-month.

The European Commission forecasts that gas reserves will rise to 90% of storage capacity by early November. The market expects that most of the gas storage can be filled 3 to 4 months earlier, around July to August.

Kadri Simson, EU Commissioner for Energy, told a foreign media outlet, "With EU gas storage more than half full, we can comfortably get through the heating season (winter)," adding, "There is greater room to reduce imports of Russian liquefied natural gas (LNG)." She emphasized, "By increasing the share of renewable energy and diversifying energy sources, some countries could completely exit from Russian supplies." This suggests that as gas reserves increase, imports of Russian LNG can be reduced.

However, it is paradoxical that one of the reasons for the EU's increased gas reserves is a significant rise in Russian supplies. According to financial information firm Refinitiv, the EU imported 22.1 billion cubic meters of LNG from Russia in 2022, a 39% increase compared to the previous year. Unlike oil and petroleum products, which are subject to price caps, Russian gas is not sanctioned. Additionally, the warmer-than-expected weather in Europe last winter reduced heating demand, contributing to the expansion of reserves.

[Image source=Yonhap News]

Some in the EU argue that reducing imports of Russian gas would increase energy independence and tighten the Kremlin's financial resources for the war, but the reality is that this is not easy. If Russian gas were sanctioned like oil, there are concerns that President Vladimir Putin might retaliate, causing prices to surge and triggering an energy crisis.

Although gas prices have stabilized compared to last year, they remain high. The Dutch TTF futures, traded on the London ICE Futures Exchange as a European natural gas price benchmark, rose more than 20% last month alone, reaching 55 euros per megawatt-hour (MWh) (for delivery in the fourth quarter of this year). This is about four times higher than the 2019 average price of 14.6 euros before the COVID-19 pandemic.

Anne Sophie Corbeau, a global research professor at Columbia University in the United States, analyzed, "European policymakers' efforts to curb imports of Russian LNG seem to be a sign of overconfidence," adding, "Stopping imports of Russian LNG could lead to various consequences in the global gas market, including retaliation from Putin."

This content was produced with the assistance of AI translation services.