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Is Europe’s Natural Gas Crisis Finally Over?

Is Europe’s Natural Gas Crisis Finally Over?

Description: European natural gas inventories…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Natural Gas Demand Outpaces Production

  • Major consuming nations are using more natural gas while production in 2022 remained flat compared to 2021 levels.
  • U.S. natural gas production has been rising in recent months alongside LNG exports.
  • Russian gas production has plummeted since the start of the Ukraine war.

Natural gas demand in major consuming countries stood in June at 104 percent of year-ago levels, but production was flat compared to 2021 levels, new data from the Joint Organisations Data Initiative (JODI) showed on Wednesday.

While U.S. natural gas production has been rising in recent months alongside LNG exports, Russian gas production has plummeted since Russia invaded Ukraine at the end of February.

In June, Russian gas production plummeted 18 percent month on month, falling for three consecutive months. Russia’s gas output in June was at 70 percent of March levels, according to data from JODI, which compiles self-reported figures from countries.

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At the same time, consumption in the European Union and the UK slumped to a five-year seasonal low in June. LNG imports soared by 50 percent compared to June last year.

High demand in Europe, high natural gas prices, and increased export capacity made the United States the world’s largest exporter of liquefied natural gas in the first half of 2022, the U.S. Energy Information Administration said last month. The United States is shipping record volumes of LNG to Europe to help EU allies in their efforts to fill gas storage ahead of the winter.

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The European Union and the UK inventories increased by 9 bcm – slightly less than the seasonal average build of 11 bcm – to stand 57 percent full at the end of June.  

According to data from Gas Infrastructure Europe, as of August 16, EU gas storage was 75 percent full. Storage sites in Germany, Europe’s biggest economy which is the most affected by the Russian cuts in deliveries via Nord Stream, were full at 77 percent.

As Europe looks to replace Russian pipeline gas, global LNG exports increased by 17 percent in June compared to the same month of 2021.

Total gas inventories increased by 28.5 bcm and stood 16.1 bcm below the five-year average, the JODI data showed.

By Charles Kennedy for Oilprice.com

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