Uniper Sees Gas Shortage in Winter If Storage Rates Don’t Speed Up

Energy giant Uniper warns that Germany could face natural gas shortages in the winter if it doesn’t accelerate the rate of filling gas storage sites.

Uniper’s chief executive Michael Lewis called for incentives for companies to stock up gas in storage in an interview with Germany’s business daily Frankfurter Allgemeine Zeitung.

Germany’s gas storage sites were only 30.6% full as of May 27, according to data from Gas Infrastructure Europe. That’s well below the 38.65% filled storage at the same time last year.

“If we don’t fill the gas storage facilities quickly, we’ll have a problem next winter,” Lewis told the German newspaper.

Germany’s storage levels have been rising since March, but the rate of refills is “still far too slow,” the executive said.

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The jump in natural gas prices in Europe and the futures curve of the Dutch TTF benchmark prices since the war in Iran began have made storing gas unprofitable for companies.

Europe’s natural gas prices have jumped by about 40% from the pre-war levels since the Middle East conflict, the closed Strait of Hormuz, and the Iranian missile attacks on Qatar’s LNG production and export infrastructure wiped off about 20% of global daily LNG flows, those from Qatar and the United Arab Emirates (UAE).

Amid the major global gas supply disruption and soaring gas prices in Europe and Asia, European buyers are now losing the competition with Asia for attracting spot LNG supply, especially such from the expanding U.S. export projects.

Asian benchmark gas prices command a large enough premium over the European TTF prices to incentivize spot cargoes turning away from Europe and opting for Asia instead.

As the summer approaches and heatwaves are expected to boost power demand in Asia, Europe will likely face an even stiffer competition for LNG cargoes in the coming months.

By Charles Kennedy for Oilprice.com

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