Europe's gas storage is filling despite significantly lower Russian pipeline supply this year, which has weakened the power of Vladimir Putin's "gas weapon" against the EU, analysts at Standard Chartered say.
"It was once thought unthinkable that Europe could get through a winter comfortably without Russian gas, but thanks to the strength of the inventory build, we now think it can," the analysts said in a Tuesday note carried by Bloomberg. "The power of Russia's gas 'weapon' has deteriorated significantly," the bank's strategists say.
According to Standard Chartered, the pace of gas storage builds in Europe this summer is some nine weeks ahead of last year's pace of injections into storage.
Europe started the 2021/2022 winter heating season with gas in storage below seasonal norms.
Russia said last month that gas supply via Nord Stream would be cut to just 20% of the pipeline's capacity, days after Gazprom restarted the pipeline at 40% capacity after regular 10-day maintenance. The Russian explanation for the even lower gas flows to Europe was that another turbine at a compressor station was sent for repairs, while the one that Canada returned from repairs has yet to be returned and installed.
Per Standard Chartered analysts, despite the low levels of Russian deliveries via Nord Stream, EU gas inventories are "still building relatively strongly."
The bank estimates that even if Russia cuts off all its gas flows to Europe, the injection season in Europe will end with enough gas in storage to provide "sufficient insulation."
Data from Gas Infrastructure Europe shows that as of August 9, EU gas storage was 72.4% full, with Germany's storage at just over 73% full, as Europe has been hauling record volumes of LNG from the United States and other suppliers to replace Russian pipeline gas.
Despite the gas stock builds, industries in Europe, including its biggest economy, Germany, have been warning they may have to curtail production amid the gas crisis, which could lead to a collapse of supply and production chains.
By Tsvetana Paraskova for Oilprice.com
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