“We’ve pushed the problem to outside of this winter and back to 2023,” James Waddell told Montel on the sidelines of the Coaltrans conference in Athens.
“The big question is ‘how do we refill next year?’, bearing in mind we’ve had a lot of Russian gas coming into the European balance in the first half of this year,” he added.
European gas storage facilities were seen last at around 93% of capacity, compared with around 77% a year ago, according to Gas Infrastructure Europe data, as the region ramped up efforts to replenish stocks amid concerns of a shortfall of Russian supply this winter.
Exports from Russia to Europe have dwindled to about 10% of last year’s average levels – amid European efforts to ditch Russia as a supplier in response to its invasion of Ukraine and alleged maintenance issues.
However, the continent has instead been able to increase supply from alternative sources, notably in the form of seaborne LNG deliveries.
“There are still some questions over whether we will still be getting Ukrainian [transit] flows beyond this month,” Waddell said, regarding supplies via the Velke Kapusany crossing between Ukraine and Slovakia, which have averaged 37mcm/day in recent weeks.
“Gazprom has been signalling pretty strongly that those flows will be cut off,” he said, pointing to a dispute between the Russian gas giant and Ukrainian TSO Naftogaz.
He also saw uncertainties regarding the outlook for LNG supply.
“The trouble is that we’ve been taking so much LNG on the spot market,” he said, noting that a lack of long-term contracts left Europe open to the fluctuations of global market dynamics.
“You have to able to win by [paying] high prices,” he said, adding that if buyers were not successful at winning cargoes, it would not be possible to refill storage facilities next year.
Price cap risk
“The worry is also that if we start putting a price cap on the European market, Asia will then have a natural advantage of being able to win cargoes away,” he said, in relation to ongoing discussions by EU leaders of a potential cap on soaring gas prices.
The introduction of a price cap posed “a very high risk”, he added, as there was “so much pressure on politicians to do something”.
More long-term contracted LNG would go to China next year, he said, if there was an economic recovery there.
However, the country’s current fiscal stimulus measures looked set to drive up industrial demand and therefore power sector gas usage, he added.