Europe's short-sighted policy on gas storage to boost costs, says TotalEnergies chief 

By Dominique Patton and Dimitri Rhodes

Nov 2 (Reuters) - Europe will not face a gas shortage this winter, but will have to pay more to ensure sufficient supply, TotalEnergies CEO Patrick Pouyanne said on Monday, adding that the region needed to rethink its storage policy.

"Europe's mistake this year, specifically regarding gas, was unfortunately to have relaxed storage requirements a year too early, which left us entering the winter with lower reserves, thereby increasing the strain," Pouyanne told reporters at a briefing on TotalEnergies' energy demand outlook.

Europe is competing with Asia for liquefied natural gas cargoes as it seeks to replenish depleted storage sites ahead of winter, amid uncertainty over the US-Israeli war with Iran and its ​impact on exports from Qatar, one of the world's largest LNG suppliers.

That has pushed gas prices higher during the summer refill season, when traders typically inject fuel into storage for winter demand.

The European energy regulators' agency ACER said in April that filling storage sites to 90% would be difficult given tight global supplies and that countries could instead target 80%, a flexibility allowed under EU rules during difficult market conditions.

Germany's gas storage sites, the largest in Europe, are entering winter at their lowest level on record, standing at 61.03% full on November 1, well below the European Union average of 74.62%, according to Gas Infrastructure Europe data.

Pouyanne said short-term thinking and the pursuit of economic efficiency had led to "a rude awakening" for Europe's gas market.

"We assumed people would anticipate gas prices rising more rapidly; instead, the markets acted as if the war would end this summer," he said.

Europe's benchmark natural gas contract closed above €100 on October 28 for the first time since the 2022 energy crisis.

"We will pay more than others, it’s simple," Pouyanne said.

(Reporting by Dominique Patton in Paris and Dimitri Rhodes in Gdansk; Editing by Milla Nissi-Prussak and Mark Potter)