Jakarta –
Plans for a strike at the second largest liquefied natural gas (LNG) processing center in Australia have forced the European Union to rack its brains to control supply and inflation. The activism of the workers at the Chevron installation coincided with tough negotiations regarding wage increases at another LNG installation owned by Woodside Energy Group Ltd.
As a result, last week, natural gas prices in Europe jumped 40 percent in reaction to the plans by workers in Western Australia. Last Friday (18/8), gas prices were high at around €36.90 per megawatt/hour.
“These facilities represent 10 percent of the total value of global LNG exports,” Ana Maria Jaller-Makarewicz, energy analyst at the Institute for Energy Economics and Finance Analysis (IEEFA), told DW.
He predicts gas prices in Europe will remain high as long as the wage conflict in Australia continues.
Minimum supply for winter
Last Thursday (17/8), the European Union announced that the amount of liquefied natural gas reserves reached 90.12 percent of the total storage capacity. The target was reached three months before the deadline, Brussels claims.
However, this amount is only enough to meet a third of Europe’s gas needs in winter.
“Even if storage capacity is nearly full, it will only be sufficient to secure minimal supplies in the winter,” said Thierry Bros, professor of energy policy at the University of Po in Paris.
“Europe still needs additional gas supplies and we definitely need bigger quantities of LNG than last year.”
Gas prices in Europe usually increase in winter due to high demand. This year, prices are predicted to rise to the level of €50/mwh, which will burden industry players and consumers.
Competition in Asia
So far, Australian gas has been mostly exported to Japan, South Korea and China. The European Union only buys a small amount of its gas needs from that country. It is feared that the drop in LNG production there will trigger competition between the EU and China.
“If Australia fails to meet its gas production quotas this year, you can bet that China will fight with the European Union or the US to buy gas from Qatar, especially given China’s small storage capacity,” said Bros.
“If there is a shortage, then there will always be great competition to buy the last gas reserves, and that is when we will see a dramatic jump in prices.”
However, the process of transformation towards renewable energy could help Europe overcome the shortage of gas supplies, said Jalles-Makarewiecz, referring to the EU’s gas consumption which fell by 12 percent compared to last year.
“If current trends continue, the impact of the strike action on Australia will not be too great,” he said, advising the EU to promote energy sovereignty by reducing gas consumption and quickly switching to renewable technologies.
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2023-08-21 15:29:35
#Europe #Worried #Gas #Strikes #Australia
