Europe’s storage gap and the limits of Caspian gas

The European Union entered the 2026 injection season with less gas underground than at the start of any recent summer, and has been refilling more slowly than the ten-year average. That is an arithmetic problem with a small number of possible solutions, and it is worth being precise about which of them the Caspian is.

The gap

Average EU storage stood at 28 per cent of capacity on 1 April 2026, below the start of each of the previous three summers. By 2 July it had reached roughly 49 per cent, a level ACER compares to 2021. Injections over the first part of the summer ran below both the ten-year summer average and 2025.

In volume, the Oxford Institute for Energy Studies puts EU storage capacity at 106.8 bcm. Stocks on 1 April were just under 30 bcm, 6.6 bcm lower than a year earlier. By 22 July they had reached 57.7 bcm, and the year-on-year gap had widened to 12.0 bcm. Filling to 90 per cent means holding 96.1 bcm; 80 per cent means 85.4 bcm.

The regulator’s assessment is straightforward. Reaching 90 per cent by 1 November would require LNG imports around 13 per cent above 2025 levels alongside normal summer demand. The lower 80 per cent target is reachable at roughly 2025 import volumes. The difference between those two targets is the difference between a comfortable winter and a winter that depends on the weather.

Why this summer is harder than the last

Two things have changed since 2025, and neither has anything to do with the Caspian. The first is the price structure. In summer 2025 winter contracts traded at a small premium to summer gas, which gave companies at least a thin commercial reason to inject. In 2026, OIES finds, the seasonal spread has been consistently negative: gas for winter delivery has been cheaper than gas bought now. Storing gas under those conditions loses money unless a government makes up the difference, and the EU has no Union-level mechanism to do so. It falls to member states.

The second is supply. An OIES comment in early June worked on the assumption that the Strait of Hormuz stays closed through October, taking Qatari and Emirati LNG off the market. Just to match last year’s 1 November storage level, it estimated, Europe would need about 70 bcm of LNG imports between May and October, similar to 2025. Its base case was that only 70 per cent would be reached by November, and that European and Asian spot prices above $20 per MMBtu might be needed to curb demand. At the same time the EU is phasing out Russian supply under the REPowerEU gas regulation, with short-term LNG contracts ending from 25 April and short-term pipeline contracts from 17 June.

What the Caspian actually supplies

Azerbaijan exported 25.2 bcm of natural gas in 2025, according to Energy Minister Parviz Shahbazov, speaking at the Southern Gas Corridor Advisory Council in March 2026. More than half of that went to the European Union. Exports to Europe are up 56 per cent against 2021.

This year’s figures show no acceleration. The energy ministry reported total exports of 12.7 bcm in the first half of 2026, of which 5.9 bcm went to Europe, slightly down from 6.1 bcm in the first half of 2025. That is despite a 1.2 bcm a year expansion of the Trans Adriatic Pipeline that came into service in January. Production was 25.4 bcm, barely changed from 25.2 bcm a year earlier.

None of this is trivial for the countries receiving the gas. TAP has carried Azerbaijani gas to Greece, Bulgaria and Italy since the end of 2020, reached by a route that avoids both Russia and Iran, and has now delivered more than 60 bcm to Europe, 50 bcm of it to Italy. For a handful of markets at the end of the pipeline, this is the difference between one supplier and two.

The mismatch

It is still the wrong order of magnitude for a storage problem. From the late-July level, the EU needed close to 40 bcm more to reach 90 per cent and about 28 bcm to reach 80 per cent. Azerbaijan sent Europe 5.9 bcm in six months, and across a full year its exports to all European destinations are in the low teens. Set that against the 70 bcm of LNG that OIES says Europe needs over half a year. The Caspian volume also cannot be redirected into storage on a seasonal schedule, because it is already contracted, already flowing, and already counted in the supply balance that produced the shortfall.

The volumes that will decide whether Europe hits 80 or 90 per cent are LNG cargoes, and the price that attracts them is set against Asian demand. That is the market to watch through October, not the Caspian.

The strongest case for Caspian gas

There is a fair counter-argument, and it should be stated at full strength. This summer’s problem is not only a shortage of molecules but a shortage of secure ones. Pipeline gas from Azerbaijan does not pass through Hormuz, does not compete with Asian buyers cargo by cargo, and is not subject to the Russian phase-out. In a year when the marginal LNG cargo is expensive and uncertain, a steady flow that is already contracted is worth more than its volume suggests. For Italy, Greece and Bulgaria in particular, it reduces how much of the winter has to be bought on the spot market.

That argument is correct, and it is an argument about resilience rather than volume. It supports the Southern Gas Corridor as insurance. It does not support treating the corridor as a tool for closing a storage gap, and the first-half export figures show that the flow did not rise to meet this year’s need even with new pipeline capacity available.

What this means for the region

The case for the Southern Gas Corridor is about supplier concentration, not volume. A market with two suppliers behaves differently from a market with one even when the second is small. That argument is sound and does not need inflating.

The risk in inflating it is specific. The memorandum the EU and Azerbaijan signed in July 2022 committed to doubling Southern Corridor capacity to more than 20 bcm a year to the EU by 2027, from 8.1 bcm delivered in 2021. That invites the region to be measured against a number that depends on upstream investment decisions, Turkish transit terms, and interconnector capacity that is not yet built. With 2027 a little more than a year away and first-half deliveries flat, the number is likely to be missed. When it is, the partnership will be read as a failure rather than as what it is.

What to watch

Three things through the autumn. First, whether member states use the flexibility in the storage rules: the regulation allows the 90 per cent target to fall to 80 or even 75 per cent in difficult market conditions, and OIES notes that reaching 75 per cent alone requires July–October injections 2 bcm above last year’s. Second, Azerbaijan’s second-half export figures, which will show whether the TAP expansion is being used or whether upstream supply is the limit. Third, the language of the next Southern Gas Corridor ministerial. A shift from volume targets to security of supply would be a sign that both sides have done the arithmetic.

Sources

• ACER, “The EU will need higher LNG imports to refill gas storage ahead of winter”, 7 July 2026
• The Astana Times, “Azerbaijan Boosts Gas Exports to Europe by 56% as Southern Corridor Expands”, 4 March 2026
• Oxford Institute for Energy Studies, Jack Sharples and Ricky Hill, “European Storage Refill in Summer 2026”, July 2026
• GIE AGSI+ aggregated gas storage inventory (live data)
• Oxford Institute for Energy Studies, Mike Fulwood, Anouk Honoré and Jack Sharples, “How much LNG does Europe need to refill storage?”, 3 June 2026
• APA, “Azerbaijan exports nearly 6 bcm of gas to Europe this year”, 17 July 2026 (Ministry of Energy data)
• Trans Adriatic Pipeline, history and timeline
• IEA Policies database, “European Union and Azerbaijan MoU to increase energy cooperation”, 18 July 2022