Europe’s LNG/Nat Gas storage now equivalent to 120 days of Nord Stream 1 – C.J. Lawrence – Commentary by Paul Kehoe – 10/25/2022

Energy supply constraints in Europe may be easing. About 10% of the LNG vessels in the world, 60 tankers, are now sailing or anchored around Northwest Europe, the Mediterranean, and the Iberian Peninsula, according to MarineTraffic, and are waiting to offload.  This could be as much as 180 bcf of Nat Gas, assuming they are very large LNG vessels.  European Natural Gas storage was approximately 94% full as of October 23rd and could easily approach 96% full by November 1st, the traditional end of the refill season. 

Weather in Europe has been mild and this has helped Europe top up storage.  As seen in the graph below, the price of Nat Gas at the TTF has dipped below 100 euros per mwh. 

Natural Gas in storage now exceeds the prior year’s storage by more than 700 bcf.  This equates to 120 days of Nord Stream 1 pipeline running at full capacity excluding the supply on ships. In late September, Norway and Denmark reported leaks in the Nord Stream 1 & 2 pipelines in the Baltic Sea, near the island of Bornholm. Seismologists detected explosions under the sea in the same area. These pipelines have been shut permanently ever since. The Natural Gas situation for the upcoming heating season in Europe may no longer be dire and should relieve some of the pressure on the European economy.

There are also several EDF nuclear plants in France that will be returning to service over the next month after prolonged outages.   Another positive for electricity market stability and a positive indicator for 2023 (note that some nuclear reactors were taken offline due to low water levels in various rivers due to an extreme drought in western Europe). German Chancellor Olaf Scholz recently ordered that the lifespan of the country’s last three nuclear power plants should be extended until April 15 next year. The Russian attempt to break the European economy through the cutoff of Natural Gas has likely failed.  This is why Russia may be reverting to disrupting the shipments of wheat out Ukraine.

Paul Kehoe is Managing Director at C.J. Lawrence. Contact him via email at pkehoe@cjlawrence.com or by telephone at 212-888-6342.