Uniper Flags European Storage Miss as Backwardation, Hormuz Disruption Squeeze Supply

Uniper warned on May 17 that European underground gas storage will fall short of year-end targets unless market conditions change, adding the bluntest corporate voice yet to a growing chorus of concern about the continent's supply position heading into winter. The German utility, which supplies roughly 190 terawatt-hours of gas annually to municipal utilities and industrial customers, controls 7.2 billion cubic meters of storage capacity across Germany, Austria and Britain — including 5.9 bcm in Germany, more than any other operator. That footprint makes its assessment hard to dismiss. "The scope for action is narrowing the longer time passes," a company spokesperson said. "Under today's conditions, the existing market framework is insufficient to ensure reliable and timely filling of the storage facilities." European storage stood at 36.3% of capacity as of May 16, according to Gas Infrastructure Europe — well below the 43.6% recorded on the same date last year. Hitting the EU's 80% target by November 1 would require 45.7 percentage points of additional injection over five months, equivalent to roughly 130 LNG cargoes per month, about 10 more than the 2024 pace, according to Spanish consultancy Tempos Energía. Germany's position is the most exposed. Storage sat near 23% full in late February, with the Rehden facility — the bloc's single largest — running particularly low. French inventories were similarly thin through the winter months. The economics are working against buyers. Dutch TTF futures traded in backwardation through early May, with summer contracts priced above winter, which penalizes traders who buy gas now and sell later. The European Commission acknowledged the dynamic on April 24, noting that refilling "should be carefully weighed against economic considerations" — an implicit admission that the market structure is fighting the policy objective. Supply is the other problem. Russian pipeline flows have run at roughly 40% of contracted levels since mid-2022, and Qatar's force majeure, in effect since March 4 following the Strait of Hormuz closure, has removed another chunk of the volumes Uniper and others had counted on. The company has shifted toward a mix of non-Russian pipeline gas, LNG and short-term spot purchases, but US LNG — now accounting for about two-thirds of European imports — is being pulled toward Asia. The Japan-Korea Marker hit $18.96 per million British thermal units on Tuesday, up 10.8% in a single session, narrowing the incentive for cargoes to head west. Equinor flagged similar concerns in early May. Industry groups Eurogas and the International Association of Oil and Gas Producers pressed regulators on May 13 to ease storage mandates, arguing rigid targets risk distorting summer markets. The EU rules allow a 10-percentage-point deviation from the 90% historical fill level, with a further 5 points available under adverse conditions. Whether those buffers are enough will depend largely on the next 30 days of injection and whether Middle Eastern supply disruptions begin to ease. If rates do not accelerate from the current pace — roughly 20% below 2025 levels through April — European buyers may end up competing for winter volumes on the spot market at the worst possible time.