![]() ![]() This is particularly important for Germany, the EU’s industrial powerhouse, with its energy-intensive automotive and chemical industries. ![]() The harsh reality is that for at least another two or three winters, Europe will have to hope for mild weather across the northern hemisphere without major interruptions to global LNG supply if it is to avoid significant gas price spikes.Įven as things stand, European gas prices remain around 50% above their pre-invasion long-run average, which is hurting both households and businesses. Should there be a physical shortage of gas in continental Europe this winter, this might undermine calls for solidarity. Only 14 out of 27 EU members introduced mandatory energy reduction policies, while eastern states like Poland, Romania and Bulgaria did little to reduce consumption. It will not help that prices have fallen, nor that some states didn’t pull their weight last winter. In the months ahead, war-weary EU states may not do so well on this front. A large proportion is coming through Ukraine, and with the current Russia-Ukraine transit agreement unlikely to be renewed after it expires in 2024, this supply route is in jeopardy.Īs part of the pivot away from Russia, the EU managed to reduce gas consumption by 13% in 2022, according to the International Energy Agency (against a target of 15%). That’s the equivalent of around 11% of all the pipeline gas used by the bloc in 2022. Meanwhile, the EU is still expected to have to buy around 22 bcm (billion cubic metres) from Russia this year. Extended maintenance work in Norway leading to more obstructions in future looks distinctly possible. In May and June, delayed maintenance work caused sluggish flows that drove up prices, again showing how tight the European market is at present. This extra load has strained Norway’s gas infrastructure. Additionally, the industry fears this kind of state intervention could backfire and undermine the functioning of the market.Īs for pipeline gas, Norway has overtaken Russia to become Europe’s leading supplier, providing 46% of the requirement in early 2023 (compared to 38% a year earlier). However, it is uncertain what level of supplies can be channelled through this instrument as it remains untested. To synchronise demand for LNG, the European Commission has introduced initiatives like the EU Energy Platform, an IT platform that makes it easier for supplier companies in member states to jointly buy the fuel. This shows that supplies remain tight and that there are many potential disruptions in our highly interconnected world market. This LNG increase has made European countries vulnerable to volatility in that market – particularly as 70% of these imports are bought at short notice rather than using the long-term oil indexed contracts that prevail in Asia.įor example, we’ve seen Europe’s benchmark gas price ticking upwards in recent weeks due to concerns over strikes at Australian LNG plants. LNG ship docking at new German LNG terminal in Wilhelmshaven. ![]()
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