European gas traders have faced a stressful race against the clock in recent summers as they have scrambled to refill depleted gas storage facilities ahead of winter.
But with demand in Asian markets sagging, Europe can expect a surge of liquefied natural gas imports over the coming months, giving the continent’s traders and governments a lot more breathing room.
Ensuring that European gas supplies were at near-maximum levels before cold weather sets in was once a relatively niche concern, but it became a political imperative after the region sharply reduced pipeline gas imports from Russia following its invasion of Ukraine in 2022.
In that year, the EU introduced rules, which have since been eased, requiring storage to reach 90% capacity by November each year, measures that created price distortions, disrupted supply and led to a hectic scramble for supplies.
No such rush is expected this year.
True, European storage is only at 76% of capacity, or roughly 85 billion cubic metres, as of August 25, according to Gas Infrastructure Europe (GIE) data. That’s down from 92% a year ago and the 10-year average of 80.5%.
In what is likely welcome news to European governments, the summer LNG storage refilling frenzy is unlikely to return for at least the next five years.
Global LNG capacity is set to increase from 550 billion cubic metres last year to 590 bcm this year and to 649 bcm in 2026, before reaching 890 bcm in 2030, according to LSEG estimates.
While supply is set to largely equal demand this year, the market is expected to see a glut of nearly 50 bcm in 2026 and as much as 200 bcm in 2030, based on current projections.
For now, though, the burgeoning oversupply in the market appears to be good news for consumers, who are set to benefit from several years of relatively low LNG prices, which, in turn, could help stimulate industrial activity on the continent.
