BAKU, Azerbaijan, July 26. Wood Mackenzie forecasts two possible scenarios for Europe this winter, Trend reports.
The first scenario suggests that Nord Stream flows will remain at 40 percent capacity.
“If Nord Stream flows continue at 40 percent capacity through the rest of the year and flows through other routes remain at levels prior to Nord Stream maintenance, Europe will be able to refill storage to over 80 percent by the start of the winter. Gas demand is expected to be 12 percent lower than previous years because of high prices and demand mitigation measures. That means we anticipate Europe will be able to get through this winter with a comfortable level of storage. But colder temperatures could create additional demand and reduce storage levels to approximately 10 bcm by the end of February. That’s the minimum that we think is required to ensure appropriate functioning of storage facilities. Limited demand curtailment may be required to manage peak demand episodes, unless additional supply is secured,” reads the latest analysis by Wood Mackenzie.
According to the second scenario, Nord Stream flows will reduce to zero, but Russian flows through other routes will continue.
“If Nord Stream flows reduce to zero by August, Europe will be able to refill its storage to only 70-75 percent by the start of winter. The continent could finish the heating season with around 10 bcm of gas in storage – which would pose a higher risk of demand curtailment. Cold weather, though, presents the biggest threat. If winter is unusually warm in Europe and Asia, gas storage risks running out by the end of February, and Europe may have to curtail as much as 20 bcm of demand – the equivalent of 7 percent of total gas demand or 30-35 percent of all industrial demand in winter. The only material upside that could limit demand curtailments would be to bring back production at Groningen in the Netherlands. However, that remains politically challenging,” says Wood Mackenzie.
The company believes that Nord Stream flows are unlikely to remain at 40 percent consistently, and are likely to be below that level. Countries that depend heavily on Russian gas, including Germany, Austria and Central and Eastern Europe, will be left most exposed to the volatility. Europe may end up in a world without Russian gas sooner than expected.