Europe to Boost Gas Storage as It Seek Diversification

Europe is set to boost natural gas storage capacity in the coming years as markets liberalize and nations seek to reduce reliance on Russian fuel, according to the International Center for Natural Gas Information.

There are currently 44 billion cubic meters (1.6 trillion cubic feet) of storage sites being built or expanded globally, 50 percent of which are in Europe, Cedigaz, as the Paris-based center is known, said by e-mail. The region plans 55 billion cubic meters more, or 59 percent of proposed global capacity.

Trading of European gas is increasing as markets liberalize, boosting competition. The European Union is looking to diversify supplies as a conflict between Russia and Ukraine threatens to disrupt supplies to the region like it did in 2006 and 2009. Russian fuel meets about 30 percent of the region’s needs, half of which travels through pipes across Ukraine.

“There are a lot of countries in Europe so a lot of them want probably their projects for different reasons, some for security of supply,” Geoffroy Hureau, secretary general of Cedigaz, said by telephone, adding that other reasons include liberalization and competition.

Europe will need more storage facilities as its reliance on imported gas is set to rise to 70 percent by 2030 from 50 percent last year, according to Cedigaz. Demand will gain 15 percent to 595 billion cubic meters in the period.

Storage sites in the European Union’s 28 members contained 77.2 billion cubic meters of gas as of Oct. 8, the most since at least 2009, making them 93 percent full, according to Gas Infrastructure Europe, a Paris-based lobby group.

Planned Inventories

The U.K. has the most gas storage capacity under construction or planned, followed by Germany and Italy, Cedigaz data showed. Germany currently has the most operational capacity in the EU, five times more than the U.K., according to data from Eurogas. Salt caverns account for 33 percent of potential new capacities, highlighting the growing need for short-term flexibility as markets liberalize, according to the center.

Some of the projects currently planned in Europe may not be built as they were proposed before demand started to fall, Hureau said. EU consumption of the fuel declined over the past three years, according to Cedigaz. Another drop is forecast for 2014, according to Eurogas, which estimates 9 percent less usage this year.

Global gas storage capacity in operation rose 5 percent to 399 billion cubic meters in the year to Jan. 1, with European space expanding 3 percent to 101 billion, according to Cedigaz. In North America, capacity also expanded by 3 percent to 157 billion cubic meters, the data showed.

In the Middle East, capacity more than quadrupled to 6 billion cubic meters due to the commissioning of the Shourijeh facility in Iran, the only country in the region with underground gas storage, Cedigaz said. In Asia and Oceania, inventory space expanded 15 percent to 17 billion cubic meters.

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