«We are overdoing alarmism: we are on average for “normal” years 2017-2021», warns Anne-Sophie Corbeau, researcher specializing in gas at the Center on Global Energy Policy at Columbia University, recalling the exceptional mildness of the last two winters. The filling rate of European stocks, at 65%, is right on average for the period. Between 2011 and 2021, France’s stocks were 56% full on average in mid-January, our barometer confirms.
Cold and no wind
«There is no particular concern for this winter, but there are real reasons for concern for the next one.», Judge Armelle Lecarpentier, chief economist at Cedigaz, an association administered by IFP Energie Nouvelle. Before winter 2024, the large underground pockets in which Europe reserves natural gas – essential for heating individuals, but also industrial ovens – were almost full. “Since the end of November, we have drawn heavily on our stocks: the level of withdrawal is at its highest since 2016-2017», explains Armelle Lecarpentier. “This is linked to temperatures much colder than what we have experienced recently, as well as to the weakness of the wind and therefore of wind production, continues the expert. This has increased demand from the electricity sector, with a 9% increase in European gas demand in the last quarter of 2024 compared to the year before.».
Added to these tensions is a tense liquefied natural gas (LNG) market. Ultra-refrigerated to be transported in LNG ships, LNG can reach the four corners of the planet, and had already saved the European continent during the energy crisis. But it is a competitive market, and the increased demand from Asian players, such as India or Japan, is putting pressure on and has led Europe to slightly reduce its imports at the end of 2024… The rise in prices at the start of 2025 has also as a consequence of making Europe an attractive customer. With success: American LNG, which already represents almost half of Europe’s supplies, tends to move more towards Europe at the start of 2025, note market observers. And flows from the United States are boosted by the commissioning in recent weeks of two new liquefaction plants (Plaquemines and Corpus Christi 3).
Stopping Russian gas transit via Ukraine
Should we be worried? If temperatures remain cold, European stocks will emerge from the winter period 35% full, estimates Armelle Lecarpentier. A low level, but which leaves room. It is then that the real challenge will come, consisting of refilling the reserves in preparation for next winter. “We are not heading towards a gas crisis, but the winter of 2025-2026 will undoubtedly be more tense than this year”summarized Jean-Pierre Clamadieu, the chairman of the board of directors of Engie, questioned on the occasion of the wishes of the energy company. “We risk ending winter 2024-2025 with lower storage levels than last year and a certain number of LNG production projects are behind schedule», he explains without sounding the alarm. Liquefaction trains being built in the United States and Qatar are expected to provide flexibility to the LNG market and simplify the equation from 2027.
-In the short term, the cessation of Russian gas transit through Ukraine since January 1 also complicates the situation. This decision was expected, but results in a redirection of part of the flow of natural gas towards Eastern Europe, and the loss of a supply of around 15 billion cubic meters annually (i.e. 5% of consumption of the continent)! Despite its stated ambition to wean itself off Russian gas by 2027, Europe continues to be supplied by gas pipeline via Turkey, and above all to buy large quantities of Russian LNG (23 billion meters) at a good price. cubes in 2024, according to Cedigaz)…
Towards a rise in prices in 2025
«We will have to re-stock massively despite the loss of Russian gas supplies via Ukraine, this is reflected in the increase in prices», deciphers Armelle Lecarpentier. While the average price stood at €34/MWh in 2024, estimates for 2025 are between €39 and €47/MWh, depending on the scenarios and sources reveals the expert, who underlines the weight of “geopolitical uncertainties» and the “high market volatility».
Enough to give some gray hairs to buyers of fossil gas throughout 2025, who will closely follow each incident on the market. The specter of a price explosion similar to that of 2022, however, remains very remote. Thanks to supplies via Norwegian gas pipelines and American LNG tankers, prices should not exceed the €50/MWh mark, estimates Armelle Lecarpentier. As a symbol: the European Union plans to put an end to the natural gas price capping mechanism at the end of January that it introduced in February 2023, after the crisis. Scheduled to come into force from 180€/Mwh, it has not been triggered.
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