EU May Have to Cut Winter Gas Demand

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

The European Union (EU) may have to cut winter gas demand by 7% as it heads into the season with gas storage levels at their lowest in 15 years.

The European Union (EU) will have to cut gas demand by 7% heading into the winter season or face a bill of 3 billion euro (US$3.4 billion) on extra gas imports.

The bleak outlook from the Institute for Energy Economics and Financial Analysis (IEEFA) comes as Europe faces winter with gas storage at just over 72% full, the lowest for this time of year since records began in 2011. With the EU's full ban on imports of Russian liquefied natural gas (LNG) coming into effect from January 2027, this means the bloc may need to reduce its 2026--27 winter gas demand by 7% year on year. LNG imports and a growing LNG regasification infrastructure in recent years have changed the EU's gas supply makeup. According to Industrial Info Resources data, there are 84 LNG-related projects in Europe worth almost US$10 billion in investment. 

Gas Storage Levels

EU underground gas storage facilities were 72% full at the start of October, around 11% below the level recorded at the same time last year and 15% less than the 2017-2025 average. According to Gas Infrastructure Europe (GIE), the association of European gas infrastructure operators, storage covered around 26% of EU gas consumption during winter 2025/26 and plays a key role in keeping the gas system balanced through the winter. Europe entered the winter with around 811 terawatt-hours (TWh), or 74 billion cubic meters (bcm), of gas in underground storage, compared with approximately 940 TWh, or 85 bcm, on 1 October 2025. There are also significant differences between regions, with storage levels in the Northwestern region comparatively low at the beginning of this winter. The gas storage level in Germany, the largest gas user in Europe, is currently less than 60%. 

Little Room for Error

"Europe is going into this winter with a resilient and highly interconnected gas infrastructure, but with less gas in storage and less room for error," explained Lucie Boost, Secretary General of GIE. "The message from the outlook by the European Network of Transmission System Operators for Gas (ENTSOG) is quite clear: if we face a cold winter and LNG supplies are tight, the pressure on the system increases quickly and demand response can become necessary. And if we draw storage down too far this winter, we also make it harder to prepare for the winter that follows. Storage is particularly important when demand changes quickly, allowing gas to be withdrawn during cold spells and periods of peak consumption."

The EU's Take

The European Commission (EC) believes the system remains robust enough to deal with the low storage levels, rising prices and uncertain global deliveries of LNG. "While gas storage levels are below historical levels, the ENTSOG report confirms that the EU gas system is sufficiently flexible to meet demand this winter," it stated. "The EU infrastructure can manage higher LNG imports and compensate for lower storage levels. ENTSOG also recalled the importance of keeping adequate storage levels through the season to cope with late winter cold spells and ease storage refilling next summer. The situation differs significantly from that of winter 2021-2022. The EU is now better prepared thanks to increased gas supply diversification, higher LNG import capacity, and reduced gas demand."

Storage Incentives are Low

With gas prices at record highs, there is little market incentive to store gas. Boost said: "Low or negative summer-winter price spreads can weaken commercial incentives to inject gas into storage, even though adequate inventories provide an important safeguard against periods of high demand and supply disruptions. Ensuring sufficient storage levels and withdrawal capacity therefore remains an important consideration for Europe's wider security of supply." According to IEEFA, covering the storage shortfall with extra gas imports would cost the EU 3 billion euro (US$3.4 billion). The US--Iran war has driven up gas prices, increasing the cost 12% more than the same volume than in 2025. "Filling gas storage depends on summer gas being cheaper than winter gas," IEEFA noted. "Because the price gap has narrowed, the potential profit has become too small to cover the physical cost of renting and maintaining the storage facilities. Essentially, a shrinking spread means the financial reward for storing gas is disappearing, making traders hesitant to fill storage. Consequently, an increased reliance on gas storage has become a major financial liability for Europe."

Importance of LNG

LNG has become key for Europe's gas security in recent years, especially following the  2022 oil and gas sanctions against Russia for invading Ukraine. It will remain one of the main sources of gas supply to Europe this winter, accounting for approximately 40% of total supply. Norway accounts for around 27% of that. Europe also has around 1,600 TWh per winter season, or approximately 145 bcm, of LNG. Competition for LNG cargos has been fierce this summer between Asia and Europe, thanks largely to the ongoing war in Iran. 

According to GIE: "Europe remains exposed to developments in global LNG markets and competition for cargoes. Furthermore, while LNG deliveries are essential to maintaining the overall gas balance, they cannot necessarily respond immediately to sudden, temperature-driven increases in demand. This is where the ability to withdraw gas from storage becomes particularly important. Under tight LNG supply conditions, ENTSOG estimates that storage could fall to 13% by the end of March 2027. Maintaining a 30% storage level at the end of the winter would require approximately 1,060 TWh, or 96 bcm, of LNG over the winter."

Key Takeaways

• The European Union (EU) may have to cut winter gas demand by 7% as it heads into the season with record low gas storage levels.
• It may have to spend 3 billion euro (US$3.4 billion) on extra gas imports.
• Industrial Info Resources is tracking 84 LNG-related projects in Europe worth almost US$10 billion in investment. 

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).