/Pogled.info/ Europe is not just lucky, but very lucky. Even such luck, however, will not save Europe from gas supply problems this year.
When the euphoria in Europe at the fact that they managed to survive the winter that everyone was so afraid of without major losses, the Europeans will realize that the current gas prices will most likely become a new reality for them and work with “gas paradise” , created by cheap gas from Russia will have to be forgotten. And the sooner Europeans do this, the better for themselves.
Europe was not just lucky, but very lucky: the winter of late 2022 and early 2323 turned out to be surprisingly warm. As a result of the warm weather and massive purchases of liquefied natural gas (LNG) last summer and autumn, Europe’s underground gas storage facilities (NGS) now have significantly more gas than usual.
Of course, the Europeans managed to survive the winter not only due to luck, but also because they had the money that allowed them, unlike a number of poor Asian countries and primarily Pakistan and Bangladesh, to buy liquefied natural gas at exorbitant prices on the spot market .
Suffice it to say that at the end of August 2022, the price per MWh rose to €340 (€3,570 or $3,780 per thousand cubic meters). In order not to repeat this unpleasant history this year, the European Union has developed a mechanism to limit the price of gas, which begins to operate when the price per MWh exceeds 180 euros.
The European Commission has also announced its willingness to buy gas for all EU members, as it did when buying vaccines during the coronavirus pandemic, to avoid competition within Europe itself.
Brussels is not sitting idly by, but even the European Commission is forced to admit that the measures taken are not enough due to fundamental factors and reasons beyond the Old World’s control.
China’s LNG demand, which dipped last year, is expected to fully recover this year, which, as you can imagine, will increase competition for the “blue fuel.” China’s LNG demand will grow to 3 million tons this year, Energy Intelligence predicts. However, Europe will remain the main destination for gas carriers because, unlike the Celestial Empire, there is no choice.
“This winter, we can say, we survived with only a few bumps and bruises, unless of course there are unpleasant surprises at the last minute,” Fatih Birol, head of the International Energy Agency (IEA), told Reuters on the sidelines of the recent Munich Security Conference.
– “But the question remains: what will happen next winter”, he asks himself.
By the way, this is not the first time that Birol has called on the Europeans not to relax.
“Although we have enough LNG terminals, the gas may not be enough for everyone,” Birol stressed.
“This means that next winter could be difficult for Europe,” he added.
Europe needs to close the huge gas import gap of 30 billion m³ created by the IEA’s calculations due to the lack of Russian gas this year. Again, according to IEA forecasts, Europe hopes to buy 23 billion m³ this year.
We must also factor into this equation the restored demand from China and the decline in gas production in the US, now the main supplier to Europe, as US gas companies do not want to risk increasing gas production due to very low prices in America.
Of course, as never before, a lot of gas will remain in the PGH after this winter, but this is little consolation, because this time it was bought last year for a lot of money. This led to large losses, as the gas produced last year was not hedged, because probably no one in Europe expected such a warm winter.
In addition, as a number of analysts, most notably John Kemp of Reuters, have pointed out, gas reserves in the UGH do not cover gas needs 100%. Even if all European storages were filled to capacity, this gas would cover less than a quarter of demand.
One more nuance should be remembered here – the uneven distribution of GHG on the continent. This means that some countries with more storage capacity will be able to provide themselves with “blue fuel”, while other countries, for example Germany, will not be able to and must, like Germany, build LNG terminals.
Berlin aims to become the fourth largest importer of LNG by 2030 after China, Japan and South Korea with a receiving capacity of 70.7 million tonnes, according to Argus, while not giving up on plans to replace fossil fuels, including gas , with renewable sources.
The EU’s recent actions suggest that the EU has already resigned itself to the fact that it will have to pay exorbitant gas prices again this year. At the same time, the authorities will again try to protect the most vulnerable sections of society from high prices. All this means that less funds will be left in Brussels for other purposes.
Translation: SM
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