If Russia cuts gas there will be a devastating crisis next winter, liquid natural gas or not
According to Rystad Energy research, a liquefied natural gas (LNG) crisis is brewing for European countries that have embraced energy insecurity after the Russian-Ukrainian crisis. Although the surge in demand has spurred the largest rush of new LNG projects worldwide in the past decade, construction times show that capacity will not be enough until 2024.
Global LNG demand is projected to reach 436 million tons in 2022, surpassing available production capacity by 410 million tons. At this point, a cold wave would be enough to blow up the entire European energy system, without Russian gas.
Underlying two contradictory European Commission plans, for a change: the REPowerEU plan has set an ambitious goal to reduce dependence on Russian gas by 66% this year, but this goal, which clashes with that of the EU to refuel. gas storage at 80% of capacity by 1 November. How can stockpiles be filled WITHOUT using Russian gas, when liquid natural gas has not yet arrived sufficiently?
Last year, Russia sent 155 billion cubic meters (Bcm) of gas to Europe, providing more than 31% of the region's gas supply. Replacing a significant part of this will be extremely difficult, with far-reaching consequences for the population, the economy and the role of gas in the region's energy transition in Europe. This will likely create a boom for liquefied gas as well, but it won't be enough
“There is simply not enough LNG around to meet the demand. In the short term, this will make winter harsh in Europe. For producers, it suggests the next LNG boom is here, but it will come too late to meet the sharp increase in demand. The ground is set for a sustained supply deficit, high prices, extreme volatility, bull markets and intensified LNG geopolitics, ”says Kaushal Ramesh, senior gas analyst at Rystad Energy.
All Russian energy plans were based on Russian gas, the weight of which was to increase further until 2030. This prevented the planning of any plan B for Russian supplies, which is typical of the EU. If Russian flows were to stop tomorrow, the gas currently in storage (around 35% full) would likely run out before the end of the year, leaving Europe exposed to a brutal winter. In this scenario, in the absence of joint purchasing agreements and competing countries for limited molecules, the price of TTF gas could rise to over $ 100 per million British thermal units (MMBtu), resulting in industrial cuts and widespread fuel swaps. in the energy sector. We have already seen cuts in fertilizer, steel and paper producers in Europe, underscoring the economic pain that awaits. In an extreme scenario of a very cold winter, not even the residential sector would be safe.
More than 20 LNG projects with a combined capacity of over 180 million tons per year (tpa) have recently reported some progress in development. To be sure of LNG supply in 2030, the market will need another 150 million tpa of production from the planned 186 million tpa.
However, the LNG projects are still to be carried out and some, such as the Total ones in Mozambique, have problems. So Europe is risking a lot: if Putin cuts our gas tomorrow, we are screwed.
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The article If Russia cuts gas there will be a devastating crisis next winter, liquid natural gas or not comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/se-la-russia-taglia-il-gas-ci-sara-una-crisi-devastante-il-prossimo-inverno-gas-naturale-liquido-o-meno/ on Tue, 10 May 2022 07:00:43 +0000.