IEA chief Fatih Birol warns against European gas storage

The managing director of the International Energy Agency said on Wednesday that while Europe̵[ads1]7;s gas stocks for this winter were almost full, what follows could pose a significant challenge.

Taking questions after a meeting of Finland’s economic council, Fatih Birol said almost 90% of gas storage was full in Europe.

“I would have preferred the European countries to be much more nimble, much … faster, to react to our recommendations,” he told reporters, referring to the IEA’s 10-point plan on how to reduce Europe’s dependence on Russian gas after the Kremlin’s invasion of Ukraine.

“But where we are is not bad, and I expect that if there are no surprises – political and technical surprises – and if the winter … is a normal winter, Europe can go through this winter with a few bruises here and there, but we may come in February and March.”

At this point, Birol said storage levels are likely to have dropped to between 25% and 30%. “So the question is, how do we go from 25% or 30% to, once again, [for the] 2023 winter … 80-90%?”

“What helped us this time, [is that] we have still imported some gas from Russia in recent months,” he said. In addition, China had imported “less gas than it would have done otherwise” due to what Birol called “very weak economic performance.”

The scenario, Birol said, could change in 2023, especially considering China. “Next year, if Chinese gas imports increase with the Chinese economy back, it will be [a] quite difficult months from March to next winter.”

“So this winter is difficult, but next winter could also be very difficult as well,” he said, adding that preparations for the latter period had to start today.

Birol’s comments come at a time when Europe is struggling to secure energy supplies as the war in Ukraine continues.

Russia was the biggest supplier of both petroleum oils and natural gas to the EU last year, according to Eurostat, but in a report published on Monday, the IEA said gas exports from Russia to the EU had fallen significantly this year.

“Despite available production and transport capacity, Russia has reduced gas supplies to the EU by close to 50% year-on-year since the start of 2022,” the Paris-based organization’s latest gas market report said.

“In the current context, the complete stoppage of Russian gas supplies to the EU cannot be ruled out before the 2022/23 heating season – when the European gas market is at its most vulnerable,” the report added.

In a sign of how challenging the current situation is, the energy company Orsted recently announced that it would continue or resume operations at three fossil fuel plants after being ordered to do so by the Danish authorities.

In a statement at the weekend, Orsted – whose biggest stakeholder is the Danish state – said the instruction was given “to ensure the security of the electricity supply in Denmark.”

A few days before Orsted’s announcement, another major European energy company, Germany’s RWE, said three of its lignite, or brown coal, would “temporarily return to [the] electricity market to strengthen security of supply and save gas in power generation.”

RWE said each of the units had a capacity of 300 megawatts. “Their deployment is initially limited to June 30, 2023,” it added.