EU may face gas shortage this winter: deficit up to 14 billion m³

Full text

BRUSSELS — The EU is facing a winter gas shortage that could leave it scrambling to replace lost energy supplies equivalent to the power used by 12 million homes, according to new reports shared with POLITICO.

The shortfall raises the prospect of a winter of soaring power bills and forced energy saving measures if the bloc fails to find adequate supplies elsewhere.

As the war in Iran continues to disrupt global energy supplies, the EU faces an overall shortfall this winter of up to 14 billion cubic meters of natural gas — around 7% of the bloc’s demand and enough to power between 10 and 12 million European households, according to a report by the Institution for Energy Economics and Financial Analysis, a U.S.-based energy think tank.

Those conclusions are echoed in a key report by a top European body of gas network operators that was presented to national energy officials on Thursday.

Natural gas is used widely to heat Europe’s buildings, power its industry and generate its electricity. But the EU’s gas reserves have fallen to their lowest level for the time of year since records began in 2011, at just above 70%, after high prices made it more attractive for traders to sell gas in the summer rather than store it for later use in the winter.

With gas prices at near-four-year highs and supply constrained due to the U.S.-Israeli war in the Middle East, Europe has limited supply options if the coming winter proves as cold as the last, IEEFA found.

While that doesn’t necessarily mean the bloc will run out of gas, it does mean there could be 7 billion fewer cubic meters of stored gas to draw upon. That could force countries to buy gas at high prices on increasingly volatile global markets, or even require consumers to cut demand if fresh supplies are unavailable.

The EU’s record-low reserves leave the bloc “with less of a buffer” against global supply disruptions, leaving it “vulnerable to price spikes,” Ana Jaller-Makarewicz, IEEFA’s lead European energy analyst, said in a statement. If countries are forced to exhaust stocks this year, that would also leave them with more to refill next year, continuing the feedback loop of low reserves and higher prices, she added.

The same risks were outlined in a 2026-2027 winter supply outlook published Thursday by the European Network of Transmission System Operators for Gas (ENTSO-G), an association of gas operators. The report warns that if imports of liquefied natural gas are limited or even “optimal” in the context of a cold winter, storage levels could fall as low as 11%, a baseline needed for strategic reserves that can’t be easily tapped into.

If countries hope to restore their reserves to 30% by the end of winter — or else face increased exposure to future cold spells — volumes equivalent to 7% of the demand will either have to be curtailed or simply withheld from consumers, ENTSO-G warns.

Part of that pressure comes from a looming EU-wide ban on long-term supply contracts for Russian LNG, due to take effect in January, which will reduce European gas imports by an additional 7 billion cubic meters, according to the IEEFA report. Russian gas has been historically used to offset “swings in demand” over the winter, it said. “Now Europe depends on storage to get through winter.”

To make matters worse, the IEEFA report argues, gas demand over winter has crept up in the past two years, while imports to the bloc have flatlined. That’s left the EU leaning harder on its reserves over the winter period, with net drawdowns rising to 22.6 billion cubic meters in January this year, up from 18.8 billion cubic meters in January 2025 and 17.8 billion cubic meters in January 2024.

The alternative would be to import fresh LNG, a seaborne fuel that the EU increasingly sources from the U.S. But at current prices, importing the lost volumes would cost Europeans an additional €3 billion, a 12% rise over what the same volume would have cost last year, on top of already sky-high prices, according to the report. U.S. LNG production is also near full capacity, meaning those additional imports would further squeeze supply, Jaller-Makarewicz told POLITICO.

To some, a rise in prices is more likely. While ENTSO-G’s tight market scenario assumes a “global deficit” that sees available LNG imports into Europe reduced by 20%, Laurent Ruseckas, a senior gas market analyst at S&P Global Energy, argues that reserves can only ever fall so low, “since a rapid drawdown early in winter will drive up prices,” drawing cargoes to Europe from Asia.

“There is not much demand to destroy in Europe,” he added, pointing out that the war in Ukraine already destroyed 20% of the bloc’s industrial demand. “And it didn’t come back.”

Frida Preuß contributed to this report.