Europe's LNG Race: A 250-Cargo Challenge Amid Rising Costs

Europe faces a significant challenge in replenishing its gas reserves, needing up to 250 additional LNG cargoes at a cost of $11 billion. This is crucial to meet the 90% storage target amid geopolitical tensions and increased demand. Ukraine also requires extra imports to fill its depleted stores.

Europe might require up to 250 additional liquefied natural gas (LNG) cargoes, costing at least $11 billion, to restore its depleted reserves before winter, industry analysts report.

Facing colder conditions last winter and geopolitical strains from the Russia-Ukraine conflict, European gas stores are at alarmingly low levels, under 34%. The European Commission aims to have these stores 90% full by November 1 to curtail future shortages.

Europe's competition for global LNG supplies intensifies as fewer pipelines supply the region. To meet storage targets, Europe might encounter substantial financial burdens, pricing in by paying premiums amidst Asian demand, said Jason Feer of Poten and Partners during a recent webinar.

Despite targets, many believe delays are likely. Kpler's analysis suggests adjusting regulatory timelines and allows storages to stabilize at 76-78% by November. Ukraine's dire storage conditions compound European pressures, necessitating an estimated 30 LNG cargoes.

Current market disincentives suggest that without government subsidies, filling these reserves might remain nonviable. Nonetheless, regulatory changes may eventually recalibrate incentives favoring seasonal storage injections.

(With inputs from agencies.)