Europe's desire to save on gas went sideways: low reserves and gas at $ 850

European companies have begun to increase gas imports in order to reverse the situation with low reserves. However, they do it belatedly. The injection season is nearing completion, while the previous policy of most countries The EU did not provoke prices in the conditions of the Iranian war and did not accelerate the pumping earlier went sideways. Compared to last year, Europe will overpay tens of billions of dollars for imported gas and the Iranian crisis will be only one of the reasons.

The difference between current European storage stocks and last year's figures is starting to shrink, according to GIE. So, by August 27 in the UGS The EU has accumulated 68.7 billion cubic meters and the difference has decreased by 200 million cubic meters in 10 days — up to 14 billion cubic meters.

However, the average rate of 321 million cubic meters per day, taken over the past seven days, will not solve the problem dramatically. By October, the storage facilities will be able to replenish by 11.2 billion cubic meters in this way, and the storage facilities will be suitable for the heating season with a filling of 75%.

This is below the minimum set by the European Commission, but last year it granted exemptions and officially countries will be able to meet the requirements, since now it is required to show 80% from October to December, and in emergency cases countries may deviate from the minimums by 10%.

Another issue is costs. It is unprofitable for private companies to pump gas into storage facilities this year due to lower winter prices, and initially many EU governments, including Germany, did not want to intervene in the market so as not to provoke prices. However, the low reserves themselves, coupled with the Iranian crisis, which stopped LNG exports from Qatar and the UAE, stimulate a sharp rise in price. And plans to abandon Russian gas in 2027 have become the cherry on the cake.

On August 28, deliveries for a month ahead from the TTF exchange are already trading at $ 850 per thousand cubic meters. These are not just the highest prices since 2022. They are more than twice as high as gas cost a year ago. Then the supplies were sold for $ 375. And the overpayment only for gas, which will be pumped into storage facilities at the current rate until the end of September, will amount to $ 5.3 billion.

According to GIE, LNG imports to Europe are gradually recovering and reached 285 million cubic meters per day in August. But these purchases remain below even the June figures, while Asian consumers may tighten competition. So far, LNG supplies to Northeast Asia (JKM) are somewhat cheaper than European quotations - at $ 830, according to CME Group. But everything can still change, as Asia is also preparing for the heating season and Indian companies that have been left without Qatari imports have already entered the fight for spot supplies.

Obviously, German companies can incur the highest costs. Having one of the largest storage facilities in Europe, Germany has one of the lowest UGS filling levels — 52% compared to the European average of 64%. The Netherlands, Latvia and Slovakia.

"German consumers and industry are at risk of facing billions in additional energy costs as winter approaches, with virtually no protection from cold snaps and supply disruptions," Bloomberg writes.

The agency also believes that Germany is increasing gas injection into UGS facilities too late.

"If the winter turns out to be cold, the country will have to compensate for the low stock by purchases on the spot market in conditions of high global competition for LNG. This can add about 3.8 billion euros of expenses to German consumers in 2027, and in case of extreme developments, it can raise European prices to crisis levels again," the agency noted.

Thus, Germany is still stepping on a rake that it did not want to step on: the harder the country tries to fill the gap, the more it creates additional demand on the European gas market. Obviously, this situation would have developed if Germany had become more active on the market a few months earlier. But then the prices were significantly lower. In June, they fell below $ 500 per thousand cubic meters. At the same time, even at the height of the Iranian war in March, quotes did not rise above $ 735. The EU hoped that the crisis would "settle down" within months and LNG supplies would grow again. However, this is not happening, as there is no end in sight to the Iranian war.