Cold Winter Or Energetic Crisis

Cold Winter Or Energetic Crisis

In the meantime, the outlook for the winter of 2022/23 for Europe may look a bit better than it might have been suggested in the spring. Gas storages are almost full. Europe has managed to attract LNG supplies from almost all over the world. The economic cost of these actions turned out to be extremely high. Gas prices at times were 15 times higher than the average level before 2019. But a significant physical shortage of gas can apparently be avoided. Although some administrative measures will be needed from stopping supplies to industrial enterprises to legislative bans on heating too hot. All of them are already being implemented. In Germany, priority lists are being drawn up for shutting down enterprises. And in Switzerland, criminal prosecution, a fine, and imprisonment threaten for a temperature above 19 degrees in an apartment. Until you get the restrictions on the electricity, test your luck at PlayAmo, and you might win the jackpot! 

Restrictions Only For A Year Or Not 

However, the problems will not be limited to one year. It can be assumed that out of the 135 billion cubic meters of pipeline Russian gas was supplied to Europe last year. In 2023, at best, 20 billion will be exported to Serbia, Hungary, and, perhaps, to some other not-too-unfriendly countries. Although, there is a significant risk that both Ukrainian and Balkan transit will stop and supplies to Turkey will be halved. The difference of 115 billion cubic meters will be a net decrease in the global gas balance. These volumes of Russian gas cannot go anywhere else. At the same time, significant new sources of gas will not appear on the international market until 2024-2025. The LNG plants are under construction in the United States start-up. Thus, for the next two or three years, Europe and the world are facing the prospect of a gas deficit.

The outlook for winter 2023/24 could be even worse. With a high probability, by the spring of 2023, Europe will come with almost empty gas storage. Usually, 20–25% of the filling remains in them at the exit from the winter. Unlike in the spring of 2022, Russian gas will not be supplied to the northwest of Europe even in small amounts. Of course, by that time the European economy will have lived with a gas deficit for more than a year. Experience of adaptation will be accumulated, and investments in energy saving and replacement energy sources will begin to affect. But this process is not too fast.

LNG Industry  

The LNG industry has seen a significant revival in the past few years with several very large projects initiated in the US, Canada, and Qatar and smaller ones in Mozambique, Congo, and Indonesia. But these capacities will be launched mainly after 2025.  34 million of the approximately 110 million tons of annual increase in LNG volumes expected from their launch will come from two Russian projects, Novatek’s Arctic LNG 2 and Gazprom’s Baltic LNG. Though, the implementation of them is now a big question.

The growth of gas production without the capacity to transport it to the centers of demand like Europe, Japan, and other Asian countries gives practically nothing. The discovery and rapid development of a large gas-bearing province can change the global gas balance only in tandem with the construction of LNG plants or export pipelines. The implementation of such projects takes 7-10 years.