Never Too Early toPrepare for Next Winter:Europe’s Gas Balance for2023-2024

As winter approaches, a combination of favourable LNG market dynamics, robust pipeline deliveries from non-Russian suppliers, lower demand, and policy actions has given Europe a chance to sidestep some of the worst immediate impacts of Russia’s steep cuts to natural gas deliveries

Strong European demand for LNG led to a reconfiguration of global LNG flows as increases in LNG supply (23 bcm) were not sufficient to meet Europe’s rapidly rising LNG imports. Higher LNG flows towards Europe were enabled in part by China’s LNG imports falling by 20% (or 19 bcm) year-to-date as it drastically reduced spot procurements. Europe’s thirst for LNG also disrupted gas and electricity supply in more price-sensitive markets, including in South Asia.

Considering current market trends, our assessment today is that the storage injection needs of the European Union and the United Kingdom will be 68 bcm (including 1.68 bcm of injections to the Rough storage in the United Kingdom). This is based on the assumption that European gas demand during this November-March period is 11% below its 5-year average. A colder-than-average winter could deplete European storage levels faster, resulting in injection needs in the range of 80-90 bcm.

Measures to limit short-term demand and storage depletion, alongside more structural measures to bring down gas demand, are absolutely essential to position Europe for next year. The drive to refill Europe’s gas storages for the 2023-24 winter heating season has to begin now. Some of the factors that helped Europe in 2022 are unlikely to be as favourable in 2023: in particular, Russian deliveries are likely to be considerably lower and competition from China for available LNG cargoes considerably higher


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