The expiry of the transit agreement between Russia and Ukraine, declining storage stocks and fierce competition for LNG are jeopardising stability. At the same time, geopolitical tensions and volatile markets are making long-term planning more difficult.
The European gas market is facing a critical test. The expiry of the transit agreement between Russia and Ukraine on 31 December threatens to lead to a shortage of gas supplies to Europe. Without an alternative solution, the consequences could be far-reaching.
Rapid depletion of stocks
One of the most pressing concerns is the rapid depletion of gas storage stocks. European stocks are already only around 75 % full - a level that is normally only reached later in the winter. This poses a threat not only to the remaining heating season, but also to the filling of storage facilities in the coming year. Traders fear that the high withdrawal rate will continue and that storage facilities will be exhausted sooner than expected.
Continued volatility and rising costs
Price volatility remains an issue on the market. The price jump in summer contracts compared to winter contracts for 2025/26 is striking, which is likely to make filling storage facilities even more expensive. The power2market natural gas editorial team sees this as a challenge to achieve comfortable storage capacities again by the winter of 2025/26.
Limited alternatives for Russian supplies
Although Russia could continue to supply gas via Turkey, the capacity of this route is not sufficient to compensate for the potential losses resulting from the end of the transit agreement. In addition, Russian LNG remains a controversial issue. Despite a record volume of Russian LNG deliveries to the EU in 2024, a planned ban on ship transhipments in European ports from March 2025 could further restrict access.
Increasing competition for LNG
Europe will increasingly have to compete with Asia for LNG supplies. Some Asian countries are increasing their purchases as gas prices fall, which limits availability for Europe. Although US LNG remains a flexible alternative, there are also question marks here. A large new terminal at least started operations before Christmas.
The natural gas market under pressure
The end of the transit agreement marks a turning point for the European gas market. In addition to short-term challenges such as falling inventories and price fluctuations, there is a threat of long-term consequences due to increasing global competition and geopolitical tensions.
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