High European gas stocks ring alarm bells for LNG suppliers

LONDON (ICIS)–Even without factoring in a potential drop in European gas demand caused by the coronavirus, the outlook for LNG sellers to the region is bleak amid high conventional storage levels.
If the same volume of LNG is supplied to Europe over the summer of 2020 that came in 2019, it could exceed total storage injection capacity, according to ICIS analysis.

Storage injection is a key source of summer demand in Europe, and high stocks could limit options to LNG suppliers who may need to look elsewhere to place their cargoes.
European gas storage as a whole is much fuller than in recent years, currently holding over 52 billion cubic metres (bcm), almost 50% up year on year.
Even if withdrawals continue over the second half of March at the same speed as over the first half of the month, this will limit potential injections to under 48bcm over the coming months.
Injections of 48bcm would take stocks back to the highest levels seen in 2019, very close to full capacity and the highest on record.
This figure would exceed the volume of LNG delivered to Europe over the summer of 2019.
It appears that LNG sellers and European gas demand are on a collision course given the major concerns over economic performance and energy demand in the coming months with Europe increasingly in lockdown to prevent the spread of the virus.
European LNG imports in January and February are up by 43% year on year, according to LNG Edge.
US LNG production is forecast to rise substantially in 2020 and Europe is a key source of demand.
Storage injection is not the only source of gas demand in Europe, but it is a key driver over the summer in the absence of cold-weather-driven demand that can quickly absorb regasified LNG.