Europe filled its storage tanks and was able to maintain sufficient capacity for the time being. However, a disruption in the flow from Russia would offset current supply from the US, leading to significant stock shortages in 2023.
There are two problems with US supply, according to Bloomberg analysis. One is limited supply, which is not expected to grow much over the next few years. Second, the fact that the energy majors and traders have secured most of the country’s liquefied natural gas (LNG) exports, almost locking down future supplies. This means that as the country emerges from her COVID-19 lockdown and economic restrictions, it can sell supplies to whoever pays the highest — which could mean China.
For Europe to remain an attractive market for traders, it needs to draw around 70% of global spot supply, mainly from the US.
“U.S. supply is particularly price-sensitive, and Europe will remain a premium market unless Asian demand picks up,” Bloomberg analyst Arun Tula said. The increases will not be enough to offset the total cuts in Russian pipe supplies, as less than half of these volumes are met by LNG increases.”
The United States is now the largest supplier of LNG to the European Union and the United Kingdom, sending about 60% of its supply to the region.
With the winter heating season approaching, Europe was able to fill its gas supply reserves to 93.8%, ahead of its 1st November target of 80%. But refilling tanks next year without Russian gas remains a challenge.
Given that 43% of gas can move anywhere according to the contract, Bloomberg analysts say that if Europe imports 60% of spot LNG, it could lag behind and replenish capacity to less than 70% by the end of summer. I can only do it.
european gas supplier
The pace of US gas exports to Europe increased sharply after Russia’s invasion of Ukraine. Europe imported her 83% of natural gas last year.
By late 2021, Russia accounted for nearly 50% of gas imports to the region. By August 2022, that number had fallen to 17.2%, while imports from other countries had increased to 82.8%.
In the first half of 2022, Norway covered over 22% of gas imports to Europe, Algeria over 10% and LNG imports from the US, Qatar and Nigeria over 25%.
Russia supplied Europe with 155 billion cubic meters (bcm) of gas before the war. Her LNG imports to the US increased from her 22 billion m in 2021 to about 40 billion m from January to August 2022.
The 27 Member States within the European Union consumed 412 bcm of gas last year, mainly for domestic heating and industrial processes. More than 30% of her European homes use gas for heating.
In addition to regular suppliers, Europe is also exploring options for importing gas from other countries.
Norway is increasing its production capacity to meet European needs, while the southern, central and western regions can import gas from Azerbaijan.
“We plan to at least double our production and exports to Europe in the next few years. We have the resources,” Azerbaijan President Ilham Aliyev told reporters last month.
800 million cubic meters of Azerbaijan gas was brought to Italy via the Trans-Adriatic pipeline. Azerbaijan plans to increase its imports from Europe by 40% to 11.2 bcm in 2022.
Faced with an unprecedented energy crisis, European countries plan to reduce their peak electricity use by at least 5% overall, limit the earnings of electricity producers and ensure solidarity contributions from fossil fuel businesses. increase.