Europe remains vulnerable to possible shocks in natural gas supply as its exposure to LNG trading and supply has grown, Stefano Venier, CEO of one of Europe’s biggest gas grid operators, Snam, told Bloomberg.
“We are in a fragile situation given geopolitics and now — in Italy and Europe — we have exposure to LNG trading,” Venier told Bloomberg TV in an interview on Thursday.
The latest flare-up of tensions in the Middle East is keeping the gas market “nervous”, Venier said, as 20% of global gas is transiting through the Strait of Hormuz.
The end of the deal for Russian gas to transit Ukraine en route to the EU would have a negligible impact on Italy, but other countries such as Austria are heavily dependent on Russian pipeline gas flows, according to Snam’s top executive.
There have been talks to guarantee some gas supply volumes to Austria, Venier told Bloomberg.
“The stop of the transit agreement will not have a significant impact on the available gas Italy has for next winter, given also the storage levels,” the executive said.
Europe’s gas storage is already 95% full, according to data from Gas Infrastructure Europe.
However, gas in storage wouldn’t cover Europe’s needs for winter, and the volumes of gas in storage are slightly lower compared to this time last year, mostly due to lower numbers of incoming LNG cargoes.
Now that more cargoes have headed to Europe in recent weeks, supply concerns could ease, but prices are set to increase with rising seasonal demand and competition between Europe and Asia for LNG supply.
Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, were up by 1.5% to $43.27 (39.82 euros) per megawatt-hour (MWh) at 12:19 p.m. in Amsterdam on Thursday, after a settling lower in a volatile session on Wednesday.
By Charles Kennedy for Oilprice.com
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