Will EU’s lack of gas storage cause supply disruptions?

Written by By Daniel Richardson, CNN

Data analysis released this week by UK energy provider Flow reveals the continent was already facing a gas shortage at the start of 2018.

With winter fast approaching, this shortage is expected to grow. And storage for natural gas in Europe is at its lowest level since 1991 — much of which has already been utilized by other countries.

Although Flow claims these developments are specific to Europe, Russia continues to play a crucial role in this region’s supply and demand picture.

You can find the methodology used to uncover this information here.

Brexit has prompted Britain to make a move to more efficient and cost-effective storage schemes.

Some of these changes involve the development of “gas vaults” or “pods.” The Pod-6 site at the Geysers in California has been generating power since 1947, and is still being updated for the current era.

In the UK, British Geological Survey told the Guardian that “currently Britain has some of the best-quality piped gas in Europe,” with infrastructure across the country delivering 40 Bcm of gas per year and enough to meet 60% of demand. This is more than France and more than Germany and Italy.

However, according to Flow, this infrastructure, as is the case across Europe, is becoming increasingly expensive to maintain and keeps some of the continent’s gas available for other markets.

Gas storage facilities are operating at relatively low levels of capacity, and despite advances in technology such as super-cooling gas (which means the country stores its gas at -196.5 degrees Celsius (about -320 degrees Fahrenheit) – well below freezing temperatures – are rapidly heading toward “normal” storage levels.

Moscow’s impact

Taking part in a recent panel discussion at Business School Europe, Dr. Alexander Lugo, head of gas storage and global projects at Flow, explained that the current low levels of storage could ultimately affect the entire Eastern European market.

He cites the potential of “Russian aggression” on the gas market as a concern, without naming any specific name. Lugo suggests that it’s “a factor that can change the situation and lead to market disruptions.”

“In terms of availability, we’re getting less and less of gas,” says Prof. Dario Scaffardi of the Florence Business School. “In Europe, we’re used to six weeks of winter gas — that could change to four weeks, and we’ll be seeing more disruptions.”

In light of these concerns, Flow is now working with several electricity and gas companies in Europe to develop an alliance.

“This would help us tackle the ever-present scarcity issues, balance the market and decrease the future risks,” said Fabio Faccio, senior communications manager at Flow.

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