The winter of 2022-2023 foreshadows more difficult winters on the gas front. Since Russia attacked Ukraine on February 24, Europe has massively diverted its supplies: Russian natural gas has fallen from 40% to 9% of European Union (EU) imports. To replace this gas, Europeans rushed to secure long-term deals with countries that export liquefied natural gas (LNG). Germany just signed a 15-year deal with Qatar, which was announced on November 29.
Also read: Article reserved for our subscribers Winter is approaching, the global battle for LNG is underway
This gas is first cooled to -161°C so that it can be transported by LNG tanker before being converted back into gas in European ports. The strong and sudden demand for gas explains the spectacular rise in gas prices on the world market, which have increased fivefold in just a few months, reaching unprecedented levels. These supply difficulties are raising fears of blackouts in several European countries that rely heavily on gas-fired power plants and hurting industry, particularly in Germany, which has become accustomed to production geared to relatively cheap Russian gas.
According to a study by the think tank The Shift Project, this situation could last for at least the next five years. In a report destined for the Ministry of Defense published on Tuesday December 6th, the think tank chaired by engineer Jean-Marc Jancovici states that 40% of the EU’s gas needs in 2025 are at risk of not being met or relying on “unidentified sources of supply” to date.
Structural Dynamics
By 2030, “without a return to normal gas exchanges between the EU and Russia, the global deficit to be feared is of the order of 100 cubic gigametres, equivalent to Qatar’s withdrawal from the LNG market,” the study reads. Based on data from the expert company Rystad Energy, it underlines that the current gas crisis has nothing to do with the economic situation, but rather with a structural dynamic.
“In reality, this crisis started in September [2021], at the time of the post-Covid recovery, and it was exacerbated by the war in Ukraine,” stresses Matthieu Auzanneau, director of the Shift project. Sanctions against Russia and attacks on the Nord Stream 1 and 2 gas pipelines have prompted Europe to look for other sources of gas. But the EU is not alone in this area: China, unlike the Europeans, has already managed to secure its supply for 2025.
You have 51.51% of this article left to read. The following is for subscribers only.