(Bloomberg) -- Europe is in a strong position to maintain steady gas supplies this winter even as a key Russian transit route is set to close, according to energy companies in the region’s top consumer Germany.
While nations such as Austria and Slovakia still depend on flows from the East, the end of an agreement governing the transit of Russian fuel through Ukraine on December 31 will do little to shake up a strengthened European natural gas market, Michael Lewis, chief executive officer of Uniper SE, said in an interview Wednesday.
“A certain amount of volume will come off the market, but that is known to the market and is in the price,” Lewis said at the Gastech conference in Houston. “Our overall position is reasonably strong going into winter.”
Europe has built up gas stockpiles earlier than the start of the heating season. It now also receives steady supply from Norway and increased imports of liquefied natural gas from producers such as the US to help replace the already reduced volumes still flowing from Russia.
“The Ukrainian volumes can be substituted,” including through additional LNG imports, Egbert Laege, CEO of Germany’s Securing Energy For Europe GmbH, said in a separate interview at Gastech. “But of course, in case of a very cold winter, there can be some scarcity in the system.”
Germany’s gas storage is nearly 96% full even though fuel injections have slowed down recently, according to the industry group Gas Infrastructure Europe.
‘Several Challenges’
Uniper and Germany as a whole no longer buy gas from Gazprom, Russia’s state-owned energy company. Uniper was nationalized during the 2022 energy crisis in one of the largest corporate bailouts in German history. After Russia invaded Ukraine and then curbed gas exports to Europe, the utility, once one of Gazprom’s key clients, was forced to pay hundreds of millions of euros a day for alternative supplies and was only able to do so with state support.
In June, Uniper was awarded more than €13 billion ($14.5 billion) in damages from an international arbitration ruling for Russian gas volumes not supplied by Gazprom since mid-2022. The company is looking at all options on how to recover the damages it won in the court proceedings. “It’s a complicated legal process. There are several challenges,” Lewis said. “It takes as long as it takes.”
When asked about alternatives to replace the expiring transit deal, Lewis said Uniper has no intention of taking Russian gas. Talks with Russia related to an eventual peace deal also appear bleak as the Ukraine war is in its third year.
“We have to see an end to the war before any sensible discussions can take place, an end to the war and a real re-establishment of relations between the EU and Russia,” he said. “It’s very difficult to see what can be done.”
--With assistance from Elena Mazneva.
(Updates with chart, comments from Germany’s SEFE in 5th paragraph)
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