Dwindling French Gas Stockpiles Stoke Fears Of Winter Blackouts

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by Tyler Durden
Friday, Feb 04, 2022 - 10:45 AM

The Brits aren't the only European nation to find itself on the verge of a full-blown energy crisis.

On Thursday, French natural gas pipeline operator GRTgaz warned that French gas stockpiles are much lower at this point in the year than they have been during years past - and as a result, they run the risk of potentially being depleted before the winter is up, a disaster that could make last year's deep freeze in Texas look tame if a sudden cold snap sends demand soaring.

According to data from Gas Infrastructure Europe, France’s stockpiles were about 34% full as of Feb. 1, which is well below the five-year average of 42%. Inventories are now at the lowest seasonal level since 2018, when a brutal winter cold snap nicknamed "the Beast from the East" left French reserves standing at just 3% when the heating season was over.

"We’ll probably be close to zero toward the end of March, and we remain vigilant on that topic," GRTgaz chief Thierry Trouve said in a presentation in Paris Thursday.

It's the most precarious for French gas inventories since they arrived at their lowest seasonal level since 2018. Inventories are now at the lowest seasonal level since 2018, when the country ended the heating season with storage at a record-low of just 3%.

And gas prices are much higher today than they were back then.

Fortunately, mild weather is expected to continue across much of Europe this month. But further down the road, limited Russian shipments to Europe and surging demand as economies reopen following the omicron wave could create problems, especially if a late-season cold snap should arise.

Additionally, France's energy problems have been exacerbated by the lower-than-usual capacity at the country's nuclear power plants, some of which have been closed over safety fears as President Emmanuel Macron seeks to modernize France's nuclear power system.

As we have previously reported, this drawdown in nuclear capacity has raised the risk of rolling blackouts in France if struggles to compensate with LNG.

France will be able to cope with a “late” cold snap assuming that  enough gas continues to arrive from Norway and from other nations via France's LNG terminals to compensate for the shortage of supplies coming “from the East,” said Trouve. He added that provisional schedules for terminal deliveries remain "well filled".

Even if supply shortages don't end up leading to rolling blackouts, it's possible that France's energy woes could create a serious political problem for President Emmanuel Macron ahead of elections in April. Energy inflation is already creating serious problems in the UK, and if renewable power generation lags, nuclear reactors remain halted for maintenance, and natural gas prices remain elevated, then higher power bills into January and February could create more unpopularity for Macron.