EU Gas Storage Levels in Jeopardy as LNG Flows to Asia

The European Union is struggling to replenish its gas storage facilities ahead of winter as increasing volumes of liquefied natural gas (LNG) from Gulf countries are being diverted to Asia.

According to energy market intelligence company Montel, the EU's target of having storage sites 90% full is now effectively out of reach. The expected gas shortages caused by the war against Iran and the closure of the Strait of Hormuz have prompted the European Commission to allow EU countries to keep stocks below the 90% target.

European facilities were only 5% full at the end of July, which is around 12 percentage points below last year's level and 16 percentage points below the five-year average. Montel's models suggest that European storage levels will stand between 69% and 84% by November 1.

The situation is particularly difficult in Germany, where storage facilities were just 46% full at the end of July. To reach even 80% by November, Europe would need to attract more than 140 LNG tankers per month in August, September, and October. However, Montel considers that unlikely unless European gas prices rise significantly or LNG flows through the Strait of Hormuz are restored.