Daily Energy Report
EU and Russian gas, Russia’s oil exports, China’s coal, and more
CHART OF THE DAY
Figure (1)
EU Natural Gas Imports by Source for February 2023
Source: EOA, 2023
Commentary:
LNG accounted for the lion’s share of the EU’s total gas imports in February or 43%, followed by Norway 36%, while Russia (excluding its LNG supplies) has retained only 7% of total EU gas imports. About 45% of total LNG imports came from the US. In other words, EU dependence on US supplies was about 20% of total gas imports.
In February, the EU’s LNG imports totaled 7.2 million tons (equivalent to 9.9 billion cubic meters). That said, February’s LNG figure was 2.7% lower month-on-month. The growing European appetite for LNG stalled in February, thanks to the above-normal gas storage level that stood at 71.65% at the beginning of the month. The level was way higher than the 3-year average (Fig.2) for this time of the year, diminishing concerns about potential gas shortages during the remaining winter season in Europe. The impact on gas prices was evident when TTF ended February with a 18.6% slump, closing the three months of continuing declines. TTF hit 46.6 euros/ megawatt hour by the end of the month.
EOA’s Main Takeaway:
Contrary to what has been reported in the press, Gazprom gas exports declined in February.
Concerns regarding a potential gas shortfall in 2022/2023 winter season faded away, and as a result, gas prices have been trading at their lowest levels since the war. It’s unlikely that prices will increase in the second quarter of the year as gas stockpiles remain stable at historic high levels. However, the second half of this year could be the real test when EU member states start filling their gas stockpiles in preparation for the next heating season. This may turn out to be a challenge with the current low flows of Russian gas, which was one of the options used to refill the gas storage last summer.
As we said in our weekly newsletter, it would have been impossible for Europe to reduce its reliance on Russian gas without LNG supplies.