Repeats with no changes

By Gavin Maguire

LITTLETON, Colorado, March 3 (Reuters) - The historically low levels of gas inventories across Europe could quickly become a major liability for utilities and industry across the region following the halting of LNG exports by world's third-largest producer Qatar.

A combination of new gas storage rules, high natural gas prices, above-normal winter temperatures and subdued regional economic activity prompted Europe's gas storage operators to deplete stockpiles to well below normal this winter.

The prospect of record exports of liquefied natural gas from the likes of the United States and Qatar had also lifted expectations that international gas markets would be brimming with gas supplies throughout 2026.

However, following drone strikes by Iran on Qatar's main LNG export facility this weekend, the prevailing narrative of persistent LNG abundance has now given way to expectations of shipment delays and sharply higher prices.

PRICE PANIC

Benchmark wholesale natural gas prices in Europe jumped by over 30% on Monday compared to the end of last week as market participants scrambled to price in the impact of the loss of supplies from Qatar.

While Europe secured only 7% of LNG supplies from Qatar in 2025, according to Kpler, the knock-on effects of any protracted Qatar LNG shutdown will likely impact all LNG trade flows, especially to the world's top buyers in Asia.

China - the world's top LNG importer in 2025 - relied on Qatar for 29% of LNG imports last year, while number-four LNG buyer India relied on Qatar for around 45% of supplies.

To plug any potential shortfalls stemming from the Qatar shutdowns, China, India, Japan and South Korea will all likely now step up order interest from other vendors, leading to tighter overall LNG supplies to all destinations.

EUROPE'S FIX

While the timeline of Qatar's outages remains unclear, major gas consumers and storage operators across Europe must quickly decide how to fend off any risks of further gas depletion while avoiding getting caught up in any panic-buying that could lift global LNG prices even higher.

The problem is, with gas inventories already at multi-year or record lows, many of Europe's top gas consumers may have no choice but to step up buying even if gas costs keep climbing.

Natural gas inventories in Germany - Europe's largest gas consumer - started the month of March at only 27% of capacity, compared to an average of 64% of capacity for that time of year since 2023, data from LSEG shows.

Gas stockpiles in the Netherlands - home to Europe's main gas trading hub - are only around 10% of capacity, compared to around 48% on average for early March.

Italy - which is Europe's second-largest gas consumer - currently has gas inventories at around 50% of capacity, which is a far better cushion than most northern peers but is still less than the average of 60% full in early March.

Overall, Europe's gas stockpiles across major markets are currently around 30% full compared to nearly 54% full for the early March period.

That means that nearly all major gas consumers in the region are under pressure to rebuild those stocks going forward, even in the face of heightened global competition for available supplies and already-rising prices.

The opinions expressed here are those of the author, a columnist for Reuters.

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(Reporting by Gavin Maguire; Editing by Nia Williams)

((gavin.maguire@thomsonreuters.com; +720 295 6101;))