IEA warns EU of severe gas shortage risk for winter 2023/24

If LNG demand in China rebounds and Russia substantially cuts or halts pipeline deliveries, the EU would face a gas shortage of 30 billion cubic meters ahead of the heating season next year, the International Energy Agency said.

Gas storage sites in the European Union are now 95% full, at 5% or five billion cubic meters above the five-year average. However, the extra volume can cover just two days in a cold spell, the International Energy Agency warned in a new report – Never Too Early to Prepare for Next Winter: Europe’s Gas Balance for 2023-2024.

The process of filling storage this year benefitted mostly from Russian pipeline flows during the summer and a decrease in imports of liquefied natural gas (LNG) into China, both of which may well not be repeated in 2023, the document reads. It raises the risk of a supply-demand gap of as much as 30 billion cubic meters, translating to almost half of the storage capacity, the authors claimed.

Russian pipeline gas supply to sink over 55% this year

The deliveries of Russian pipeline gas have substantially dropped, though they were close to normal for much of the first half of the year. The 2022 pipeline supply to the EU is seen down by over 55% or 80 billion cubic meters, IEA added.

Moreover, in the ten months through October, output in the hydropower and nuclear power sectors reached multiyear lows. It sunk 20% and 16%, respectively, year on year.

The impact of gas supply issues was worsened by a steep fall in hydropower and nuclear power output

At the same time, the United Kingdom and EU managed to import 65% or 50 billion cubic meters of gas more than in the same period of 2021 via LNG shipments. Gas demand tumbled 10% or by more than 40 billion cubic meters.

Increase in global LNG deliveries in 2023 is forecasted at half of 2016-2019 average

If China’s LNG imports recover next year to their 2021 levels, it would capture over 85% of the expected increase in global LNG supply, which boosts the risk of a gas shortage in the EU. The United States is expected to account for one third of the total increase, estimated at an equivalent of 20 billion cubic meters of gas. The forecasted growth in LNG deliveries would come in at only half of the average from the 2016-2019 period.

“Governments need to be taking immediate action to speed up improvements in energy efficiency and accelerate the deployment of renewables and heat pumps – and other steps to structurally reduce gas demand. This is essential for Europe’s energy security, the wellbeing of its citizens and industries, and its clean energy transition,” IEA Executive Director Fatih Birol said.