Gazprom not needed: EU ended heating season with record-breaking gas reserves

Despite all the Kremlin's attempts to "freeze Europe", EU countries are ending the heating season with record-breaking gas reserves for the second year in a row. Meanwhile, Gazprom's supplies to Europe have fallen more than fivefold compared to pre-war levels, and are likely to decline even more next year, as Ukraine refuses to renew its gas transit contract.

The heating season in the EU ended on March 31, and storage stocks were 58.7%, according to Gas Infrastructure Europe. This is the maximum volume in history - higher than a year ago, when Europeans, frightened by the russian gas cut-off, sharply reduced its use both in industry and at the consumer level.

Two warm winters and a radical restructuring of the supply system helped to cope with a possible shortage. Liquefied natural gas has become the main source of supply, overtaking pipeline one, and the main supplier, replacing russia, is the United States: it now provides almost half of Europe's LNG imports, compared to about a quarter before the war.

Gazprom's supplies to Europe last year amounted to 28 billion cubic meters (at the level of the second half of the 1970s), compared to more than 150 billion cubic meters in the pre-war year 2021. From five pipelines, gas to Europe now supplies through only two.

At the same time, in February, Austrian Energy Minister Leonore Gewessler said that the country, whose gas imports are provided by russia for more than three quarters, is considering the possibility of terminating the contract with Gazprom. And in the event of Ukraine's intention to refuse the extension of the transit agreement from 2025, Gazprom will be left with one working pipe - to southern Europe via Turkey.

Since the most acute moment of the energy crisis, gas in the EU has become cheaper almost 14 times. The Dutch TTF futures price, which in August 2022 at its peak exceeded EUR 340 per MWh (over USD 3,600 per 1,000 cubic meters), has been hovering around the 25-euro mark (USD 285) since the beginning of February this year.

Europe is now facing an oversupply problem this summer, Natasha Fielding, Argus Media's European gas market director of pricing, told the Financial Times. According to her, if the warehouses are replenished at the same pace as last year, the goal of filling them by 90% by November can be achieved already in early August.

Ukraine, which has large gas storage facilities in the western regions, provides additional capacity to European gas companies.