The International Energy Agency (IEA) warned last week that Europe could still suffer a very tough winter if Russia halts its remaining natural gas deliveries to the continent, even though those supplies have already declined to a post-Soviet low.

Russian gas pipeline flow to Europe has averaged about 2bn cubic metres per month so far this year, or roughly six to seven times less than the corresponding 2017-2021 range. But Russia has also been sending around an equal amount of gas in LNG form.

Europe has enjoyed a steady decline in gas prices over the last six months thanks to mild weather, ample LNG supply and demand reduction and destruction. The front-month TTF gas contract is currently trading at around €25-30 per MWh ($300-360 per 1,000 cubic metres), which is still considerably high compared with what was considered normal prior to the COVID-19 pandemic, but is some 90% lower than the price in late August 2022, when it spiked at €340 per MWh.

The EU has also managed to accrue significant amounts of gas in storage, with underground facilities currently filled to 83% capacity – more than 20 percentage points above the previous five-year average. Expectations that the EU will meet its end of October target of 90% storage capacity filled months ahead of schedule have fuelled recent falls in gas prices.

However, the IEA warned last week that even if Europe managed to fill its storage caverns to nearly 100% of capacity before October, amounting to around 100 bcm of supply, the market could still be turbulent this winter.

“Our simulations show that a cold winter, together with a full halt of Russian piped gas supplies to the EU . . . could easily renew price volatility,” the IEA said in its annual gas market report.

The IEA’s experts are among a number to warn EU authorities to avoid complacency in the struggle against the energy crisis. In the event of a cold winter, a complete halt in Russian pipeline gas supply and scarcity of LNG – if European buyers face stiff competition with others in Asia – EU storage could enter April next year at only 20% of capacity, creating a risk of supply disruptions.

On the other hand, if Europe has another mild winter and LNG flow remains on a par with last year’s record level, “storage sites would end the heating season with inventory levels above 50% of capacity even without Russian piped gas,” the IEA said. “Continued structural gas demand reductions” such as increased energy efficiency, faster deployment of renewables and the installation of heat pumps “will be required to ensure a secure gas balance for the 2023/24 winter,” it said.

The Paris-based agency also lowered its medium to long-term outlook for gas demand to account for the supply crisis created by Russia’s actions.

“The sharp increase in natural gas prices reduced its competitiveness vis-à-vis other sources of energy supply, while its image as a ‘reliable’ fuel has been called into question by steep supply cuts of Russian piped gas,” it said.

The IEA cut its forecast for global gas demand growth for 2020-2024 to 200 bcm from the previous 350 bcm, noting that Europe alone was responsible for over half of the revision.

“This reflects more stringent energy efficiency standards, the accelerated deployment of renewables and quicker electrification of heat, as well as a reduced role of natural gas in industry,” it said.