Dutch gas reserves slump to lowest level since 2018

The Netherlands’ gas in storage has dropped to its lowest level in eight years, as Europe continues withdrawing stockpiles despite warmer weather, amid soaring prices and a global shortage of LNG caused by Iran’s blockade of the Strait of Hormuz.

Data published by Dutch gas grid operator Gasunie showed that the country’s underground storage facilities were at just 5.8% of capacity on March 25. This compares with a EU-wide level of just over 28%.

While neither the Netherlands nor Europe as a whole was heavily reliant on LNG supply from Qatar, which has been halted following Iran’s closure of Hormuz, the loss of these volumes globally has led to Asia and Europe fiercely competing for replacement cargoes. Qatar accounts for one-fifth of global LNG supply. 

However Gasunie played down the severity of the situation. 

“Although the filling level of the gas storage facilities is extremely low, winter is virtually over, and the filling season is approaching,” a spokesperson told local press. “We are monitoring gas flows closely. At the moment, we see that the supply of gas to the Netherlands is stable.”

The Netherlands imports around 55bn cubic metres (bcm) of gas annually, with majority sourced via pipeline from Norway. It also gets LNG mostly from the US but also Russia, Africa and elsewhere.

Notably QatarEnergy signed a deal with Shell in 2023 for 3.5mn tonnes per year (tpy) of LNG starting in this year for delivery to the Netherlands’ Rotterdam terminal. However, this supply was to come from Qatar’s North Field East (NFE) expansion project, not online yet and set for delays amid the US-Iran conflict.

The Netherlands was previously a major gas producer itself until the phase-out and eventual closure in 2023 of production at the Groningen gas field, the biggest gas field in Europe outside Russia. Operations at the field had been causing minor earthquakes in the area for years, causing damage to local property. 

Europe’s gas security was already in jeopardy prior to the crisis after a warmer than usual winter led to significant withdrawals of gas reserves. With prices at the TTF hub having soared to almost €55 per MWh ($680 per 1,000 cubic metres), up 70% from the pre-war level, the European Commission is understood to have told member states to refill gas stockpiles only gradually as the heating season draws to a close to avoid fuelling a further hike in prices.

The EU will face difficulty reaching 90% gas storage target for the start of November, unless further regulation kicks in to force companies to refill storage facilities at exorbitant prices. With futures contracts priced at roughly the same level next winter as this summer, there is no market incentive to place gas in storage with a view to withdrawing and selling it when the next heating season arrives.