Europe makes 'good' progress in preparing for winter gas demand: EC official

Europe has made "good" progress toward being prepared for the peak winter demand season even as a gas transit agreement between Ukraine and Russia is expected to expire in December, a top European Commission official told S&P Global Commodity Insights Oct. 6.

"We do everything we can to ensure preparedness," Matthew Baldwin, EC's deputy director-general for energy, said in an interview on the sidelines of the LNG Producer-Consumer Conference 2024 in Hiroshima.

"The situation is as good as it has been in previous years," Baldwin said, referring to Europe's efforts to find alternative gas supplies since Russia's invasion of Ukraine in 2022.

The five-year gas transit agreement between Ukraine and Russia expires in December and Ukrainian officials have said they would not discuss an extension with Moscow. Russia's Gazprom has continued to export gas to Europe via Ukraine, with deliveries mostly stable for much of 2024 at around 42 million cu m/d, including deliveries to Moldova.

Prices of European natural gas curve products have recently climbed on speculation of supply disruptions due to the Middle East fighting despite bearish fundamentals.

Platts, part of S&P Global Commodity Insights, assessed the month-ahead contract of the Dutch TTF at Eur40.695/MWh Oct. 4, up 2.4% on the day.

"Since the crisis in 2022, we're working extremely hard to ensure that we are delivering gas security in Europe. We have a number of different mechanisms which we put into play," Baldwin said.

"We are using storage where we set this obligation to have a minimum of 90% fill rate each year," he said, adding that the current fill rate is 94%. "And that is a very important source of assurance and insurance to the gas market in Europe that we covered."

In addition to replacing Russian gas from other sources, Baldwin said: "We've also taken measures to reduce our demand, 18% on average across the board. So we've done a number of measures to help control the situation. We've had record amounts of renewables coming into our power supply system. We now have more energy generated by renewables than from gas.

"We've had extraordinary new amounts of LNG coming in from the United States. Norway is now our predominant pipeline supplier," he said. "So an extraordinary transformation overall."

Asked to comment whether the EC intends to keep its market intervention measures in effect, including its gas price cap, joint purchasing, demand reduction targets and storage obligations, Baldwin said: "Let's see. It will be for the next commission to decide whether to maintain these different measures."