Gas Withdrawals from European Storage Facilities have Fallen to their Lowest in a Decade
At the same time, gas injections on December 31 exceeded withdrawals from gas storage for the second day in a row, amounting to 295.6m cu.m. This was due to warm weather and the arrival of subtropical air masses in the region.
In December, total gas withdrawals from European storage facilities amounted to 15.63 bcm. This is the fourth highest total since 2011, when the GIE started observations.
The European storage capacity decreased by 20.6 bcm to 60.38 bcm compared to last year.
Last year, European gas exchange prices hit record highs on several occasions. By December 21, the January futures price on the TTF hub in the Netherlands reached a record high of $2194 per 1,000 cu.m. Fitch experts attributed this to a reduction in pumping through the Yamal-Europe pipeline, information that the commissioning of Nord Stream 2 is not expected before the second half of 2022, as well as news about a possible cold snap in Europe. By December 27, the exchange price of gas had dropped to $1160 per 1,000 cubic metres (€97.95 per 1 MWh).
On 29 December, Gazprom head Alexey Miller said that the second string of the Nord Stream 2 pipeline had been filled with gas and the pipeline was fully ready for operation; it is awaiting approval from the European regulator.
Against this background, exchange gas prices continued to fall: on December 30, they dropped below $1,000 per 1,000 cubic meters. On the last day of the year, the gas price dropped below $800 per 1,000 cubic meters for the first time since November.
In an interview with RBC, Deputy Prime Minister Aleksandr Novak named the reasons for rising gas prices in Europe in 2021: among them were the abandonment of long-term gas supply contracts with Russia in favor of spot contracts, which caused, he said, the fuel supplies to be pumped into underground gas storage facilities in summer, the drop in own gas production, the cold winter of 2020/21 and the risk of a repeat of cold weather.