Gas storage: Complacency or Crunch?

Europe may have emerged from winter without a full-scale gas crisis; but with storage levels unusually low, geopolitical tensions rising, and summer-winter price spreads offering little commercial incentive, the real challenge may only just be beginning.

Germany, home to Europe's largest gas storage capacity, is facing mounting pressure to refill ahead of winter while the war in the Middle East, uncertainty around LNG transit through the Strait of Hormuz, and fragile industrial demand all cloud the outlook. Across Europe, policymakers are weighing whether market forces alone can deliver enough supply; or if strategic intervention may once again be required.

Will Europe’s gas market rebalance in time, or are governments heading back into crisis-management mode?

Host:
Richard Sverrisson – Editor-in-Chief, Montel News

Guests:
Maria Haensch – Germany Correspondent, Montel News
Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH
Erisa Pasko – Senior European Gas Analyst, Energy Aspects

Editor:
Alexandra Carlon

Producer:
Alexandra Carlon

#GasStorage #Germany #EuropeanGas #LNG #EnergySecurity #NaturalGas #Geopolitics #EnergyMarkets #PluggedInPodcast #Montel 

Transcript

Welcome And Winter Stakes

Richard Sverrisson – Editor-in-Chief, Montel News 0:07

Hello listeners and welcome to Plugged In, the energy news podcast from Montel, where we bring the latest news, issues, and changes happening in the energy sector. This week we turn our attention to one of Europe's most pressing energy concerns: gas storage. With storage levels in key markets like Germany well below seasonal norms, volatile summer-winter price spreads eroding economic stimuli to inject gas into storage units, and geopolitical tensions in the Middle East threatening energy supply routes, how prepared is Europe really for the winter ahead? As the closure of the Strait of Homoose rattles global gas markets and governments weigh whether regulations, subsidies, or strategic reserves may be needed once again, we ask whether Europe can refill its storage facilities in time, or whether another energy crunch or financial crisis could be looming. Is this simply a temporary market distortion, or are structural vulnerabilities in Europe's gas system being exposed once more? Now it's a real pleasure to welcome on the pod Maria Hensch, who's our Germany correspondent based in Berlin. A warm welcome to you, Maria. First time on the pod.

Maria Haensch – Germany Correspondent, Montel News 1:22

Yes, first time. Thanks for having me.

Richard Sverrisson – Editor-in-Chief, Montel News 1:25

Brilliant. We're here to talk about gas storage, Maria. Uh what what is the current sentiment like about you know regarding gas stocks in Germany?

Maria Haensch – Germany Correspondent, Montel News 1:35

I would say so far the sentiment is like cautious, but not yet alarmist. So first of all, Germany has the biggest storage capacity in Europe with around 250 terawatt hours, which is close to a third of our yearly gas demand. And that capacity at the moment is relatively empty, not quite 25%. And at its lowest level this winter, we've seen a little more than 20%, which was the lowest since April 2018. So since then we have seen net injections, which is a good thing. And uh, according to the economy ministry, like uh the storage capacity for winter is booked to 70%. But market experts usually say that this does not mean that all that gas will definitely be in store at that time. So it's definitely there's some concern as to how storage can be filled, especially since you know no one knows how long the war in Iran is gonna take. And of course, the economic incentives are low. But for now, I would say it's mostly a question of like how much are we willing to pay for the gas, and it's not a physical shortage.

Richard Sverrisson – Editor-in-Chief, Montel News 2:46

Very interesting, Maria. I mean, uh, what are the options that that Germany has to fill gas storage?

Maria Haensch – Germany Correspondent, Montel News 2:53

Well, so the old-fashioned way, I guess, would be to let the market work its magic, which at the moment it doesn't look like it's going to do that because the summer-winter spread is basically non-existent. And both winter and summer contracts are pretty much on par. And uh some analysts do believe that the spreads could rebalance later in the year, so that the further we get into the injection season, the higher the winter risk premium will be, right? And then the whole thing would rebalance. But as long as that is not happening, and the war in Iran is raising the pressure for like a market intervention by the government, and the current German government is not very open to the idea, like they do not like intervening in markets. But the leading politicians they have said that they are at least uh examining the idea of creating a state gas reserve, which would be similar to what we have in the oil markets. And economy minister Katharina Reich, she previously said she wants to wait it out until like at least early May, which is pretty close from here, and see whether the gas market spreads will turn positive again. And so far, that does not seem to be the case. So the discussion about a storage reserve is gaining some traction. But of course, Germany has had bad experiences with that, or bad, at least very costly experiences. Because if you look at the past, in 2022, during the Ukraine crisis, I mean when Russia invaded Ukraine, the former German government had basically already created a strategic reserve. Um, they had tasked the market area manager THE to buy about 50 terawatt hours of gas, put it into store storage at like 175 euro per megawatt hour. So it was pretty expensive. Cost some 8.7 billion euros, which was widely criticized. And because at that moment the gas was not needed, the government later sold that gas off again at an average price of only like 48 euro something. So that reserve already existed, but now it's gone.

Richard Sverrisson – Editor-in-Chief, Montel News 5:04

Maria, fantastic. Thank you very much for setting the scene for this week's podcast. Thank you.

Europe’s Storage Picture With Analysts

Maria Haensch – Germany Correspondent, Montel News 5:09

Thank you.

Richard Sverrisson – Editor-in-Chief, Montel News 5:10

To help us break down the risks, the market mechanics, and the policy choices facing Europe, we're joined by two leading experts at the forefront of gas analysis. Sebastian Gulbis, managing director at Enervis Energy Advisors, and Arisa Pasco, Senior European Gas Analyst at Energy Aspects. Welcome to Plugged in.

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 5:31

Many thanks.

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 5:32

Thank you for having me on the podcast.

Richard Sverrisson – Editor-in-Chief, Montel News 5:34

I I'd like to start off really by talking about where we are at the moment. Um Sebastian, what are storage levels like in Germany, gas storage levels?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 5:46

We are roughly at uh 25%. Almost. So quite low.

Richard Sverrisson – Editor-in-Chief, Montel News 5:53

Is that sort of a common occurrence for this time of year in Germany or are we lower than normal?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 5:58

So we are lower than normal, but as expected. Let's say that.

Richard Sverrisson – Editor-in-Chief, Montel News 6:03

Okay. So no drama yet.

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 6:05

Well, uh, I would feel a little bit better if we would have some instruments in place uh which will help us to fill them up over the course of the next months.

Richard Sverrisson – Editor-in-Chief, Montel News 6:15

We'll be talking about all of those in in this podcast indeed, Sebastian. So we'll go into more detail about how what could possibly be required. Erisa, what about other parts of Europe? I heard in the Netherlands stocks are quite low as well.

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 6:29

Yeah.

Richard Sverrisson – Editor-in-Chief, Montel News 6:30

Could you talk us through those?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 6:31

Yeah. I mean, Netherlands started this winter with very low storage, um, just because they have a very low storage target. Um, but overall in Europe, it's not looking so bad and not as bad as the market had feared that we would exit um this winter with. So for the moment, it's not looking as bad.

Richard Sverrisson – Editor-in-Chief, Montel News 6:51

Okay, so no drama. Obviously, uh we'll talk about a number of different issues, but the war in Iran has had a huge impact here. Um, and the financial incentives to inject gas into storage are not there at the moment. Could you outline why that's the case in Germany, Sebastian?

Why The Summer Winter Spread Vanished

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 7:10

Uh well, basically, uh, we started already with quite low spreads, summer-winter spreads in uh after the winter with the injection period. And well, then it happened uh that we had the Iran crisis. And following that, uh the especially the summer products uh got more expensive, uh, crushing the summer winter spreads to uh I think the lowest were minus six euro per megawatt hour. And now we are currently at around minus 0.3 euro per megawatt hour, so quite low at the end of April. So it's not looking that good to fill up the storages in the next month.

Richard Sverrisson – Editor-in-Chief, Montel News 7:55

Because obviously, to fill storage for the winter, you need lower prices in the summer than they are the case in the winter. And that's not currently the case, right?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 8:04

Yeah, the yes, that's the basic idea of the storage.

Richard Sverrisson – Editor-in-Chief, Montel News 8:08

Exactly. That's the storage economics, if you like, in a 101. But Erisa, is the same picture mirrored across Europe?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 8:14

Yes, it's really largely what's happening across the entire European market that is also driving the unusual spreads in the THE prices. Um but this is not really uh like a a shift in a structural shift in fundamentals. This has mainly been driven by policy or geopolitical events. It doesn't mean that it's going to stay like this across the entire summer if the Middle East crisis resolves by in the next few weeks and we get this Middle East supply coming back, then it's likely that the spreads will normalize by the as the summer goes on and the injection season goes on. But yeah, that would be largely depends on when that Middle East supply comes back.

Richard Sverrisson – Editor-in-Chief, Montel News 8:58

Yeah, that's that's a very interesting point there. Is I think you know, we'll go into maybe the economics and the commercial incentives for storage operators in a in a while. But uh what what's what's your uh view, Sebastian, on the on the war in Iran? We've seen some uh ships pass through the Straits of Us Moose or one yesterday. Do you expect, I mean, the hundred dollar question, $100 billion question, even, is will the straits open? And what what are your expectations here?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 9:29

Uh well basically I don't know. So it's it's quite unreliable, of course. And uh well, it's uh let's say more easy to keep the strait closed uh than have it open, as uh one successful attack or even the attempt uh would uh leave the ships not going through the Strait of Homoose. And this is, I think, uh the most crucial point. And hopefully uh there will be somehow a solution over the next weeks. And uh if that happens, of course, uh hopefully the spreads coming back to normal again, as the summer products then uh go more down than the winter products again, and then we have a positive summer winter spread.

Richard Sverrisson – Editor-in-Chief, Montel News 10:19

Absolutely. That's a lot hinges on this. What are what are your uh forecasts here for the straight-up or moors and the Gulf War in general areas at energy aspects? How long do you expect the closure to last?

Strait Of Hormuz Risk Scenarios

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 10:30

Yeah, I mean, we did see this one cargo from the UAE transiting yesterday, but that doesn't really mark a shift in what will happen. At energy aspect, we assume that there will be a recovery in transit by the end of May. So um around 50% may recover by the end of May. Um and then the recovery in LNG production will take uh will be very gradual. So total production would not really occur before September or October.

Richard Sverrisson – Editor-in-Chief, Montel News 11:02

That's interesting. That's quite an optimistic view. I've heard that before. And obviously, we're in a very, very unpredictable world where things can change very, very rapidly. But Sebastian, so what does this mean then in terms of you know, for storage operators? That the you know what kind of incentives do they need to fill up the storage facilities?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 11:22

Well, the the question is who's giving the incentive, the market or the regulatory environment, the the government? So uh at least uh so the summer winter spread is not the only incentive they have, but it is uh, let's say, a marker, even though if you look at the past, it uh wasn't a good marker to say if the storages at the beginning of the winter are full or not. Uh, however, if you look at it, uh one would say nobody is willing to book storage capacities currently, and we do have that in in Germany as well that uh not all of the uh capacities are booked. Uh, so there won't be filled up in the future unless we do have either economic uh spreads in the market, or we do have different incentives based on uh, let's say uh government-driven new regulatory environments.

Richard Sverrisson – Editor-in-Chief, Montel News 12:24

Okay, I will come back to those in a second, Sebastian. But what's your view, Erisa? What needs to happen? What kind of incentives needs to be put on the table across Europe, not just in Germany, but elsewhere?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 12:34

Well, to add some positivity here, the spreads are not, like Sebastian said, the spreads are not the only factor. Um, we actually uh believe there's a lot of um injection demand that is priced inelastic. And that means that that's basically utilities that still need to put some gas into storage to ensure that there is enough protective supply uh for certain uh customers, so that would be households, schools, uh hospital, anything essential really. And the cost of storing this gas would normally be passed through via retail tariffs to these consumers. So utilities can still make profit even if the the gas that they stored was not bought uh when there was an economic incentive.

Richard Sverrisson – Editor-in-Chief, Montel News 13:16

What how much gas are we talking about there? Is it what kind of percentage is that of the total?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 13:21

We've done a very rough estimate of this just based on some of the regulation. Particularly, um France is very good uh with this. We have assumed that maybe around 35 to 40 BCM of injection demand could be priced inelastic, so that will happen even if spreads don't normalize. And that could get us in the EU at the EU level, that could get us to the EU minimum storage target.

Richard Sverrisson – Editor-in-Chief, Montel News 13:48

That could get us that high. Okay, that's that's that's a that's a ray of optimism there, should we say Arisa? Absolutely. Uh Sebastian, what's what's your view here? And and and in particular, you mentioned these regulatory incentives. What what do you mean there?

Incentives That Could Fill Storage

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 14:02

So what Erisa just said is uh we don't have that in Germany and not in all of the European markets. So uh well, basically I would say structure and flexibility is based on market prices. So uh this will not happen, at least in Germany, from my perspective. So we may have uh some other issues um uh due to mining regulations, so that you have to fill up storages. Uh this will lead to a certain injection, uh, but this will not solve uh the problem we may come up with in winter. And of course, uh one aspect could be these uh, let's say, backpack principle uh that you if you supply a certain amount of customers, that you have to have storage. This could be one uh regulatory framework uh in Germany as well. Uh, what is currently discussed is uh more a strategic gas reserve, so that uh the government basically uh books storage capacity and fills it up and keeps it until prices are rising to a certain level.

Richard Sverrisson – Editor-in-Chief, Montel News 15:10

So the the government is basically actor is acting as as a trader there, as a gas trader.

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 15:17

Well, I wouldn't go that far. We had that uh uh shortly uh after the crisis, um, that the government or trading hub Europe acted as a as a gas trader, uh or was to uh was forced to act if uh to act like a gas trader. I think uh the the strategic gas reserve, it's a question how it is done. Uh well, so the government just uh can say we auction certain volumes and you have to supply us with them. And it's not intended to trade them already within the future market, for example. It's uh uh injected to stay there until we really had an emergency uh emergency issue.

Richard Sverrisson – Editor-in-Chief, Montel News 16:00

So you don't see a situation that we saw in 2022 where basically the German government wrote a blank check to fill the storage levels, uh Sebastian.

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 16:07

They skipped it already last year, where we have the same discussion, if I remember correctly. Yeah, uh so I do not think that they will come up with the same instrument again.

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 16:18

Yeah, I mean the the gas crisis there that call that was caused by the Russia Crane war is still very recent memory, and governments have learned their lessons in just from that. And it was largely the THE announcement that it would help storage that drove prices to those peak levels. It will be interesting how if if you are in that situation again, how they would intervene, because you do have this thing that happens when THE or any government announces that they will help the market will front-run it.

Richard Sverrisson – Editor-in-Chief, Montel News 16:50

As as happened in 2022. So what so you don't see repeats of that, Erisa, but do you see what kind of regulator regulatory interventions uh do you expect, if any?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 17:00

It's hard to say. I think the Germany is the biggest question. In other countries, you do like the biggest capacity holders at least, which are France and uh Italy, they've already have subsidized um measures, so you you would expect there to be a lot of injection demand. Netherlands is another uh country with a lot of storage capacity, and there you have the state-owned company EBN that is mandated by the government to fill that storage if the market does not does not do it.

Richard Sverrisson – Editor-in-Chief, Montel News 17:33

You know, we had figures uh last week from ACE, the European regulatory body, saying that if prices stayed around euro 50 euros per megawatt hour for for gas, then the cost of of meeting uh storage obligations uh would be around 15 billion euros. Um so Sebastian, what I mean, is there anything that can be done at the European level? Do you think?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 17:55

Well, I think basically uh we have to deal with the market, and we are now much more exposed to the LNG market, which uh struggles due to the Iran crisis. And uh, well, if we start to inject in our storages, uh we have to compete with uh the Asian market. Um and this will well lead to a certain price peaking, I guess. Uh, we will see that. And uh basically for me the question is uh I I would have discussed this uh last year. Uh but uh that so if they uh would have started last year with the strategic reserves and not waiting until we have the next crisis, uh of course this would have been better, and now we are in this situation, and well, we do have problems, we are exposed to LNG spot volumes much more than the Asian market, and on top of that, long-term contracts are quite difficult as we do have uh decarbonisation uh targets within the EU. And this, of course, there's a certain mismatch uh between the targets, basically.

Richard Sverrisson – Editor-in-Chief, Montel News 19:11

I mean, obviously, you know, the LNG is a very global market, uh, even though the vast majority of LNG that comes into Europe doesn't come from uh uh the the Gulf region, right? There is so it comes, you know, there's USA is obviously the main one. You've got pipe gas from Norway, uh etc. But there is a danger here, is there not of really being dependent on one source? Um is isn't that not a danger here?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 19:35

There is indeed a danger. Um there is actually not a lot of supply flexibility in the market like there was in 2022. So most of the flexibility that is happening now, uh both in Europe and in the global market, is from demand reduction measures. And we've seen a lot of demand destruction in Asia. So it it is not that is why it's not looking as bad for the European injection season yet. But these demand reduction measures, so those are in the form of fuel switching, industrial curtailment, they cannot they cannot help the market for such a prolonged period of time. So if the Middle East crisis continues for a lot longer, we can't rely just on those, especially in some sectors like fertilizers where you face issues with food security.

Richard Sverrisson – Editor-in-Chief, Montel News 20:28

Absolutely critical, absolutely for sure. And and and Sebastian, obviously, if we mentioned demand destruction, could you maybe outline what's happening in Germany? And some of I mean Germany is the industrial heartland of Europe. What what's happening in here? What happens in Germany will have rebo repercussions uh across the whole continent. So what what what's happening with German industry? Are they they must be very, very concerned at these sustained levels of of gas prices?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 20:53

Yeah, well, indeed, uh you might have noticed that uh our industry is not performing that good in the over the recent months. And uh on top of that, now we have the Iran crisis. And uh, of course, they are also starting with uh demand destruction to a certain extent. Not on a level where I think we were uh with the beginning of the Ukraine war, but still we have do not have the price levels yet, of course. Uh and we probably won't see these price levels again uh within this crisis, even if the Strait of Homoose uh will be closed uh longer than expected currently. So, well, they are start struggling, and of course, the question is how long does this situation hold on?

LNG Competition And Industry Demand Cuts

Richard Sverrisson – Editor-in-Chief, Montel News 21:43

The the critical question: how long will it last and and when will the straits open again? In terms of industry, how flexible can they be in terms of you know, um, closing down production or you know, at certain times of day, you know, what what or fuel switching? Um Or or basically electrifying a lot of these processes. Is that are you we seeing something like that happening already, Sebastian?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 22:08

Well, yes, I think when it's economic feasible, uh most of the clients already did that. Uh so uh they already switched, for example, to oil, even though that is uh also expensive, coal is expensive as well. So uh the question always is does it make sense to switch at these current gas levels? And as almost everything was gone up uh in terms of prices, it's well a quite narrow decision, if or if not to fuel switch.

Richard Sverrisson – Editor-in-Chief, Montel News 22:41

You know, what's your view here, Erisa?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 22:42

Yeah, I would say that we the measures we've seen in Europe are still not that meaningful yet. It's still very early in the conflict. There has been some fuel switching, but not a lot. That that switching capability has actually declined since 2022. Um we did see some industries then switch to liquids, but we think that a lot of them actually did not switch back to gas in recent years. And a lot of refineries or petrochemicals have actually closed down. And that those are the sectors where you would see switching. Beyond that, we've also seen a lot of industrial closures actually in Europe in recent years, particularly in the German chemical sector. There was some optimism from industrial clients because prices were falling and they were expected to decline in the coming future. But with this crisis, it's becoming a lot more uncertain. So we might see if it gets prolonged, more closures happening and more companies choosing to relocate overseas where the costs are much, much lower.

Richard Sverrisson – Editor-in-Chief, Montel News 23:49

So is that a discussion that's currently happening in Germany spestien? Relocation, uh, and where would where would these companies relocate to? Was it is it China, uh the US?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 23:59

Well, what are the main factors, I guess? So it's uh the question of employees, uh payment of employees, and of course energy prices, indeed. And uh, well, I think we we saw a lot of close downs, um, which is either bankruptcy of especially smaller um, so commercials, for example, and uh the bigger industry is thinking about leaving Germany uh to better markets abroad. That's true.

Richard Sverrisson – Editor-in-Chief, Montel News 24:33

Question here is how how serious are those thoughts? I mean, it's also a very strong lobbying tool to get sort of industrial power prices at a level that industry wants in Germany, which is now the European Commission has approved, and maybe they're looking to extend some of those rules. That's a that's a very powerful tool, is it not?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 24:51

Well, uh I would say while in the past, uh I would say industrial clients are always complaining. Uh, but I think uh that currently the cr all these crises uh hit them really hard, and they have really strong thoughts about uh leaving Germany.

Richard Sverrisson – Editor-in-Chief, Montel News 25:13

And and elsewhere in Europe, Erisa, are you seeing uh sort of flights of industry or potential kind of you know, more than actual thinking and considering, but actual, you know, dismantling plants and moving elsewhere?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 25:28

It's mostly in Germany, really. Um, there have been some closures in other countries, I think Spain, Italy, a lot of them are in the refining sectors that have closed down, the UK especially, but most of it is Germany, really.

Richard Sverrisson – Editor-in-Chief, Montel News 25:43

Yeah, and that's obviously what policymakers want to avoid. Uh is it not, Sebastian? That you're losing jobs, you're losing the industrial, the pulse of the country there.

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 25:54

Well, they try, let's put it that way. But that that should be their target, correct?

Richard Sverrisson – Editor-in-Chief, Montel News 26:01

Isn't there a way of looking at this in another way? For example, you know, that these, you know, you've had obviously COVID, then you had Ukraine, then you had the Gulf War, the war in Iran. Um, isn't there a you know argument saying, well, uh the one way to lessen the dependence here is to really just electrify fully, Sebastian, go for the green transition. Um isn't that something that should be on the table more?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 26:27

Well, basically the question is if this uh happens now due to first, everybody notices well, oil is more expensive, so gas is more expensive. And basically, uh, if we compare uh gas price increases to power price increases, it's much less already because we do have uh renewables uh within the system. And well, you find all over the place in the in the news uh comparisons between uh diesel and and gasoline uh vehicles uh compared to uh electric vehicles. So uh basically, yes, it's currently cheaper. The main question is as these um electric-driven vehicles are much more expensive typically. Uh so it's a question of do you have the money to buy it, especially in the current crisis uh when you're probably going to lose your job. This is maybe an issue, but yes, this should be uh well a self-fulfilling prophecy now.

Richard Sverrisson – Editor-in-Chief, Montel News 27:34

And Erisa, what do you think uh here?

Renewables Push And Winter Forecasts

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 27:36

Yeah, I think I think it's likely we're going to see an acceleration in investment, well, in investments in renewables. We saw the same thing happen after 2022, and the same thing is likely to happen now in both Europe and actually in Asia. It will be interesting to see actually if the growth in gas fired capacity in Asia happens given all the geopolitically driven volatility in the market. One thing worth mentioning there is there even though the um growth in renewable generation in Europe might lower gas prices and Europe's reliance on it, it will not completely remove volatility in prices, particularly over winter.

Richard Sverrisson – Editor-in-Chief, Montel News 28:23

And and certainly it won't uh reduce volatility in in power prices either. I think you know uh the days when there's a huge amount of renewable production prices are very low, and when there isn't much, they're very high. Um I'd just like to round off really by discussing with you guys what what your expectations are for November, you know, so October, November. Where do you think the gas storage facilities will be? You know, I know it's time for your crystal ball, Sebastian. What what can you tell us? You know, where will we be? Will we be at uh 40% or will we be at over 80?

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 28:55

Uh well the uh maybe we have uh to distinguish between uh what do I hope? I hope we are at 80 percent at least, and uh we might be lower, uh depending on the question how does the Iran crisis develop? So I think uh Eriza, you you mentioned it. Uh, if the Strait of Humuz is closed, let's say over the course of the summer, this will be well, this is then uh the worst case situation because then we have high prices in in summer, and uh in winter everything is fine again, maybe almost. And uh well then uh one could say maybe it's better then to have the Iran crisis over the winter as well, just to keep prices up within the uh within winter to get storages filled.

Richard Sverrisson – Editor-in-Chief, Montel News 29:48

Arisa, over to you. Yeah, what are your expectations?

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 29:51

At the moment, we think Europe will manage to get um to us storage level is going to be adequate for winter. Um at the moment we're expecting 86% for Europe. Um, but that yeah, that's very contingent on when the remuse, the Strait of Vermose reopens. We based on our analysis, we see July as the inflection point. So if the Strait of Vermuse does not open by July, that's when the real challenge begins. And that's when it might be difficult to even reach that minimum storage target without prices jumping to 2022 crisis levels.

Listener Thanks And Next Steps

Richard Sverrisson – Editor-in-Chief, Montel News 30:31

So maybe we should um have this discussion again in July, then Erisa and Sebastian and see where we are then. Um guys, thank you very much for joining the Plugged In podcast uh this week.

Sebastian Gulbis – Managing Director, Enervis Energy Advisors GmbH 30:42

Thank you. My pleasure.

Erisa Pasko – Senior European Gas Analyst, Energy Aspects 30:44

Thank you.

Speaker 5 30:45

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