EU may need to cut winter gas demand by 7% as storage hits record low, IEEFA warns

The Institute for Energy Economics and Financial Analysis (IEEFA) warns the European Union may need to cut winter gas demand by 7% as storage levels hit a record low. On October 3, EU gas storage sites were about 72.4% full, which could supply 7.3 billion cubic meters (bcm) less gas than in the previous winter, from November to March.

This shortfall is due to the EU's complete ban on Russian liquefied natural gas imports from January 2027. While the storage shortfall does not mean EU gas storage will run dry this winter, emptier sites release gas more slowly, potentially leaving the bloc short during a late-winter cold spell. Refilling the depleted system next summer would require a bigger and pricier refill, costing approximately €3 billion, a 12% premium compared to last year's cost due to the US-Iran war lifting prices.

Europe's gas market has been strained since the Iran war began in February, disrupting shipping through the Strait of Hormuz, a route for about a fifth of the global LNG trade. Gas prices in Europe have reached their highest since 2022, with Dutch TTF futures hitting €84.5 per megawatt-hour in mid-September. EU Energy Commissioner Dan Jørgensen urged governments to keep curbing demand amid exceptionally low storage levels.

Governments are stepping in, with the Hague clearing up to €993 million to help state-owned EBN build reserves, Germany instructing state-owned importer SEFE to store 8 terawatt-hours of gas by December 15, and Spain increasing LNG held at its import terminals by over 25%.