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Europe energy crisis shifts to 2023-24 winter

The overall gas situation in Europe remains stable at the start of April with the continent’s gas storage levels at around 56% and neutral gas prices holding steady below €50/MWh ($48/MWh). With the formal end of the 2022-23 winter season, EU nations are halting gas withdrawals as countries shift their attention towards refilling gas stocks for next winter.

To refill gas stores, EU member states have agreed to extend the bloc’s voluntary 15% gas reduction target for another year until March 2024. The original reduction target for end of March has been extended to meet the bloc’s target of filling 90% of the continent’s gas stores by November 2023.

The EU has agreed on negotiating positions for two energy-focused pieces of legislation regarding natural and renewable gas use. These proposals are intended to assist EU members to transition away from natural gas and towards renewable energy sources and other low-carbon gases including biomethane and hydrogen. The proposed plan includes a security clause allowing member states to temporarily block LNG and gas imports from Belarus and Russia without the need for EU sanctions.

Energy-intensive companies across Europe report production disruptions, with several German companies citing impacts due to high energy prices in March. Chemicals manufacturers struggle with persistently high energy prices that are pushing companies to divest operations away from Europe.

French strikes cause gas levels to decline

The continent ended the 2022-23 winter season with gas levels at an all-time high of above 55%. Gas storage levels across the continent are expected to increase again as countries focus on refilling gas supplies in time for next winter.

Gas levels in France declined by around 10% over the course of March as the country dipped into gas stores due after strikes at all four of its LNG import terminals. Workers at the terminals went on strike as part of a larger protest movement against the French government’s pension reforms that increase the country’s mandatory retirement age.

The lack of LNG imports at French terminals caused a subsequent drop in gas exports to Belgium, which saw its own gas stores decrease by around 8%. However, the continent’s overall gas stores have seen a limited impact from the strikes as all 17 LNG shipments that were diverted away from French LNG terminals eventually offloaded at other terminals across Europe, including in the United Kingdom, Spain, and Germany.

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