Europe Unlikely to Meet 80% Pre-Winter Gas Storage Target, Equinor Warns
Equinor CFO Highlights Challenges Facing European Gas Storage
By Nora Buli
Current Gas Storage Levels and Market Conditions
OSLO, May 6 (Reuters) - Europe will struggle to replenish its depleted gas storage sites to a targeted 80% filling level before the start of next winter, Equinor's head of finance said on Wednesday, citing unfavourable price spreads and lower-than-expected supply levels.
European gas storage sites are currently around 30% full, which is six percentage points below the seasonal norm, Chief Financial Officer Torgrim Reitan said on a call with analysts.
Price Incentives and Market Dynamics
However, the shape of prices in the market, where contracts nearer in time are more costly than those for next winter, is not giving the incentives to inject for the time being, the CFO added.
Potential Impact on European Gas Market
"So we believe that gas storages will likely not reach the 80% target that is set. Meaning that going forward, the European gas market will be vulnerable to weather events, (to) operational issues," Reitan said.
Supply Changes and Global Factors
This comes in addition to supply changes in the market, with the Middle East war having damaged Qatari liquefied natural gas (LNG) production, which could take up to five years to repair, cutting Qatar's exports capacity by 17%.
"So currently, we don't see that glut of LNG through this decade as we were sort of expecting just half a year ago," Reitan said, adding that Europe needed to buy LNG to meet its demand.
Long-Term Outlook for Gas and Oil Markets
The damage also meant that while oil markets could maybe return to normal within half a year of a re-opening of the Strait of Hormuz, "for gas, it will take much longer", he added.
Equinor's Financial Performance
The CFO spoke after Equinor reported first quarter earnings, lifted by high output and rising oil and gas prices in the wake of the U.S.-Iran war.
(Reporting by Nora Buli, editing by Terje Solsvik)
