European gas storage operators under pressure Report

Insight 24 August 2017

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Report summary

The market value of gas storage is to a large extent determined by the summer-winter spread of gas prices. In recent years these spreads have fallen to levels where some storage operators/owners are struggling to cover their annual operating costs. This has contributed to 8 bcm of capacity being closed or mothballed in Europe since 2010, despite overall capacity in the region growing by 18 bcm. Wood Mackenzie has carried out some sensitivity analysis, reducing storage capacity by 25% in north west Europe to see what the impact on price spreads might be. We have also assessed what the price impact of a particularly cold winter might be under these conditions.

Executive summary
- The European storage landscape
  - Table 2: Individual Country Storage Cover 2017
- The use of storage in today's gas market
- Can the market sustain current storage capacity?
- Gas storage in an over-supplied European market
- Conclusions

Tables and charts

This report includes the following images and tables:

European gas storage operators under pressure: Table 1
Figure 1: Storage Cover in the EU 2010-2017
Figure 2: Continental EU Storage Use 2016/2017

Figure 3: TTF Summer-winter spreads vs storage tariffs
Figure 4: Gas Storage as guarantor of supply security/The role of storage
Figure 5: Summer-winter spreads forecast with 25% northwest European storage capacity reduction
European gas storage operators under pressure: Table 2
Table 3: Gas storage closures in Europe