/ world today news/ American LNG producers believe that fuel supplies to Europe have raised domestic prices. With a victory in the 2024 elections, the Republicans can turn off the valve, the media believe. This makes the Old World very nervous. How will Washington act and what will Brussels do?
Fear has big eyes
Since last year, energy in the EU has been mainly supplied by LNG. The US share of imports is 42.7%, Qatar is about 15%, Algeria and Nigeria are about 14% each.
The prospect of losing its biggest supplier is causing real consternation in Europe. There is no surplus fuel in the world and an alternative is not readily available. According to experts, new liquefaction capacities, and hence additional volumes of LNG, will appear only by 2027.
In 2022, Europeans were saved by the slow recovery of the Chinese economy after the pandemic. American supplies were profitably redistributed due to low consumption in Asia and unprecedentedly high prices in the EU (around $2,000 per thousand cubic meters). The White House calculated: exports to China decreased by 76.7%, to other countries of the Asia-Pacific region – by 36.8%, to other countries – by 40.7%.
“Helping partners has nothing to do with it, traders just maximized profits. Last year they had record revenues,” says Sergey Pikin, director of the Energy Development Fund. In his opinion, there has been talk of stopping supplies in order to raise prices again. “Now prices in the EU are 320-350 dollars per thousand cubic meters, seven times less than in July 2022. This allows them to actively replenish stocks for the winter,” the expert adds.
According to Gas Infrastructure Europe, storage facilities are more than 85% full and savings programs are still in place.
Plan B
Analysts say the Europeans are unlikely to stop LNG, but the fuel will flow to the highest bidder. For example in Asia. So the concern of some countries is quite justified.
In addition, expensive energy forces the transfer of production from the EU to the US, where gas is cheaper and subsidies are given for “clean sources”, reminds independent industry expert Leonid Khazanov. “The Republicans are just scoring points in the election campaign by using overseas partners to solve their own problems and continue to steal Europe’s best businesses,” he explains.
Those who cannot afford the additional costs will have to look for an alternative. For example, to try to negotiate with Qatar or Russia. By the end of last year, Moscow entered the top three importers of LNG in Europe, but competition with India and China is intensifying. Experts point out that the EU could try to increase the flow through the Maghreb-Europe gas pipeline or expand the Southern Gas Corridor by building the Trans-Caspian gas pipeline. But this is not a quick job, and Algerian supplies in the last six months have been only 15 billion cubic meters instead of the planned 20.
There is also coal. Despite the objections of environmentalists, the shutdown of coal-fired power plants was stopped in 2022. “They bought so much that there were huge stocks left over from the winter that had to be sold off in the spring,” says Pickin.
After all, some European countries will be able to get by thanks to nuclear power. French nuclear power plants are still operating, partially supplying Germany, peaceful nuclear is used in Belgium, Hungary and Finland. Britain plans to build several nuclear power plants within ten years. However, the fuel is still bought from Russia. “Specifically, in the first half of the year alone, the United States purchased from Russia half a billion dollars worth of enriched uranium for domestic consumption,” Pikin points out. In Europe, they want to impose sanctions on the Russian nuclear industry, but supplies continue.
High hopes
The EU also places great hopes on renewable resources – windmills and solar panels are being actively installed. For Europeans, this is a chance for energy independence. At current prices, the question of profitability is not worth it, experts are convinced. “Everything is known in the comparison. When gas is sold for $2,000, windmills will pay for themselves in three years, especially since the technology becomes cheaper over time. By the next decade, green energy will significantly change the balance,” Pikin believes.
The corresponding infrastructure is being developed not only in the EU, but also in the USA, and China has the most, but they are in no hurry to give up coal. Beijing is dealing with emissions reductions, but very deliberately and, unlike Europe, smoothly.
So far, no one is counting on the Turkish hub. Analysts believe that no lucrative offers should be expected from Ankara. “They accept blue fuel and then resell it at a premium as their own, which means it won’t be cheap,” Khazanov explains.
Experts agree that the only way out in a critical situation for the EU is to reduce consumption. Limiting the air temperature in the houses, turning off the street lights, stopping production – and for a long time. Thus, France has not canceled the “energy sobriety” program, and the local authorities do not get tired of repeating: economy must become a habit.
Translation: V. Sergeev
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