Experts say 2023 won’t be a better year for gas – Business AM

As suppliers struggle to get enough gas and electricity to power households over the next few months, experts already fear the same problems could repeat themselves or worsen next winter.

Why is this important?

The Ukraine war and the subsequent Russian gas boycott caused the energy crisis we are experiencing, and the consequences may be long-lasting. In December, one of the UK’s most respected energy consultancies warned that gas prices could remain high until the end of the decade.

News: According to experts, the situation on the continent in the coming winter will largely depend on the temperature of January, February and March. Bloomberg.

  • Martin Young, senior analyst at Investec, said there would be more wind power coming online before next winter, which would help power supplies. However, uncertainty about coal and nuclear remains.
  • If the weather is unusually warm, people won’t need as much gas to keep themselves warm, and Europe’s gas reserves will be spared at the end of winter. Then it would be easier for the continent to replenish its reserves in the summer, even without Russian gas.

Context: Although supplies from Russia were cut last summer, part of the gas was still coming in. This allowed me to put it aside a bit.

  • To be able to transport this gas further, it is cooled to -160°C to liquefy it so that it can be stored and transported more easily. Projects for new terminals have emerged off the coast of Europe to help transport this LNG.
  • In early December, Germany inaugurated its first LNG terminal, marking a radical shift in the country’s energy policy, which in the past was closely tied to Russian gas imports.
  • The UK, Spain and Portugal have the largest LNG import capacity in Europe, giving them access to global markets. But the Iberian Peninsula doesn’t have many gas pipelines connecting it to the rest of Europe. Hence projects like BarMar, which connects Barcelona to Marseille.
  • Gas from Norwegian and UK gas fields will also be used to supplement European reserves during the warmer months when demand is low.

Problem: Next summer, the gas pipelines connecting Russia to Europe will probably be almost all shut down.

  • There are a limited number of LNG carriers in the world and a limited number of berths in Europe. But all countries need gas.
    • Europe will have to outpace what other buyers around the world are willing to pay.
    • As a result, Europe will see higher prices in the coming years, increasingly relying on LNG carriers for its gas needs.
  • “Likely scenarios are that Russian gas flows through the pipeline will decrease further than in the summer of 2022, and gas prices will remain at pre-pandemic levels until at least 2030, as the market needs time to adjust to this change in supply. and demand dynamics in Europe,” said senior research analyst Dr Matthew Chadwick Bloomberg.
  • In addition, the lack of gas pipelines between Spain and the rest of Europe requires the latter to import part of its LNG from the UK via the Netherlands.
  • Although LNG offers a partial solution to Europe’s gas supply, it cannot bring prices back to where they were before. LNG is already an expensive means of transporting gas: it takes a lot of energy and the right equipment to get and maintain enough cold in tankers.

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