'Supply is not guaranteed': Europe faces mounting pressure ahead of winter

Contents

01

Gas storage remains below seasonal levels

02

LNG competition adds to supply pressure

03

Energy producers warn of a costly winter

Gas storage remains below seasonal levels

European gas storage was around 75% full in late October, leaving the bloc with less of a buffer ahead of winter than in previous years. According to the European Union Agency for the Cooperation of Energy Regulators (ACER), storage levels stood at just 28% at the end of the previous winter, compared with a nine-year average of around 40%.

Refilling reserves has also become more expensive. ACER estimates that replacing the same volume of gas now costs an additional €18 billion to €33 billion because of the disruption to global energy supplies.

The pressure is already visible in wholesale prices. Dutch TTF benchmark gas briefly exceeded €100 per megawatt-hour on October 28, its highest level since December 2022. Before the latest Middle East conflict, prices were around €32/MWh.

LNG competition adds to supply pressure

Europe's reliance on imported liquefied natural gas (LNG) has become a major concern. US supplies account for around 30% of the EU's total gas supply, while Russian gas represents approximately 11%. However, the bloc's overall LNG imports fell by 14%, and no significant volumes of Qatari LNG reached Europe during the summer.

Disruption around the Strait of Hormuz has further tightened the market. Europe is now competing with Asian buyers for available LNG cargoes, increasing the risk of price volatility as winter demand rises.

The impact extends beyond gas markets. An Allianz report published in November estimates that more than 80 energy facilities across the Gulf have been attacked, with roughly one-third suffering severe damage. Direct physical damage and reconstruction costs could exceed $200 billion, while cumulative economic output losses could reach $790 billion by 2030.

Energy producers warn of a costly winter

European energy companies have warned that colder weather could put further pressure on prices. Equinor CEO Anders Opedal said that gas prices could rise sharply again if temperatures fall significantly later in the winter.

TotalEnergies CEO Patrick Pouyanné, meanwhile, said Europe was unlikely to face an outright gas shortage but would have to pay more to secure supplies. EU storage rules allow countries to reduce their filling targets under difficult market conditions, but the lower buffer leaves less room for unexpected supply disruptions.

The United Arab Emirates has also sought to reassure international buyers about its role as an energy supplier. Speaking at ADIPEC, UAE energy official Sharif Al Olama said the country's oil exports had continued during the crisis, supported by diversified infrastructure and export routes. The UAE currently has 8.2 GW of solar capacity and plans to expand it beyond 20 GW.

With Russian LNG imports set to be phased out from January 2027, Europe will need to secure additional supplies from other markets. The extent of further price pressure will depend on winter temperatures, Asian demand and how quickly disrupted LNG production and transport routes recover.