America makes a fortune in energy! Can Europe avoid "shortness of breath" this winter by vowing to cut Russian gas
Sharp changes in the geopolitical situation continue to impact the natural gas market.
Over the past week, many European countries have begun to warn of possible "gas cut-off", and Germany and Austria have successively declared that natural gas has entered a "state of emergency". While announcing sanctions on energy exports to Russia, the leaders of EU member states are now under increasing public pressure on price issues. The consumer price index (CPI) of the eurozone rose 7.5% year-on-year in March, continuing to set a record. This is the fifth consecutive month that the inflation rate in the eurozone has reached a record high.
European countries are now focusing on how to quickly find new energy supplies and whether to intervene in the market by limiting prices previously, the EU reached an energy cooperation agreement with the United States to help the EU market obtain at least 15 billion cubic meters of LNG this year commodity market information and intelligence company ICIS LNG analyst Thomas Rodgers said in an interview with the first financial reporter that combined with the actual situation, the EU is unlikely to achieve the goal of significantly reducing Russian natural gas this year
EU gas storage target can be achieved
Recently, the European Commission announced a series of energy supply security plans, including requiring the natural gas storage capacity of EU Member States to reach 80% by November 1, 2022, which is slightly lower than the 90% target filling rate proposed in early March according to data from gas infrastructure Europe, the gas storage rate in Europe was only 26% as of March 30
At present, Russia supplies 40% of the EU's natural gas. Increasing gas reserves will undoubtedly help the EU reduce its energy dependence on Russia and its potential impact. Valdis dombrovskis, executive vice president of the European Commission, said that as part of drafting an emergency plan to meet natural gas demand, the EU was currently assessing all situations, including the possibility that Russia would stop supplying natural gas to the EU.
Generally speaking, the summer of low consumption is the time window for filling natural gas inventory facilities in Europe. Traditionally, gas injection will start from April 1 and last until September 30. October 1 to March 31 of the following year is the winter consumption period Europe's weather forecast shows that a new round of cold wave has raided Europe since the weekend, and the temperature in many places has dropped by more than 10. It is expected that the cold wave will last for many days, which poses a challenge to the upcoming gas storage nodes and may threaten the prospect of energy supply this winter industry statistics show that up to 30% of EU energy consumption in winter comes from inventory. Donbrovskis said that according to the plan of the European Commission, the EU's demand for Russian natural gas will be reduced by two-thirds by the end of 2022 and completely eliminated by 2030. In the future, the EU will focus on accelerating the replenishment of winter natural gas stocks and ensuring the provision of affordable, safe and sustainable energy.
with the forced withdrawal of Russian natural gas, the supply gap left by it has become the target of public criticism, and the United States has taken the lead in the competition with traditional suppliers such as Australia and Qatar U.S. Energy Information Administration (EIA) data show that in January this year, the EU received five times the amount of natural gas transported by Russian pipelines, which is the first time in history that the United States exceeded Russia.
The development of shale oil and gas revolution has made the United States a powerful force in the global energy market. Between 2017 and 2020, the United States completed a large number of oil and gas pipeline infrastructure construction, making it possible for the United States to export a large amount of liquefied natural gas (LNG) to Europe financial data technology company refinitiv showed that in the past March, the export volume of liquefied natural gas in the United States was about 7.43 million tons, an increase of nearly 16% month on month, a record high Europe has become the largest export destination of liquefied natural gas in the United States for four consecutive months, accounting for about 65% of the total export volume.
Rogers told reporters that before the escalation of the situation in Ukraine, Europe's LNG imports had soared to an all-time high. The additional risk premium from the conflict has led to higher prices in Europe, which is attracting energy goods from all over the world.
However, it should be noted that considering that the export volume of Russian natural gas to Europe reached 155 billion cubic meters last year, the assistance of all parties is far from enough at this stage Rogers said that it is neither easy nor practical for Europe to reach the goal of reducing Russian natural gas "on the one hand, Europe has limited space to unload additional LNG. On the other hand, Gazprom With long-term contracts signed with utility companies across Europe, this supply agreement has a certain flexibility. If Europe can continue to import LNG at the current rate and the flow from Russia is not significantly disturbed, the natural gas inventory in Europe this winter may be better than that in 2021. " He said. Rogers predicts that Russian natural gas exports may fall back to 110 billion cubic meters in 2022.
Wood Mackenzie, an energy consulting firm, pointed out in the report that if Russia interrupts its natural gas supply to Europe now, Europe still has enough natural gas to maintain until the end of this winter and the following summer. However, after leaving Russian natural gas, demand reduction from 2022 to 2023 will be inevitable.
EU expands energy security approaches
Although Europe is eager to end its dependence on Russian gas the biggest practical difficulty is that once the pipeline transporting Russian natural gas is excluded, the choice of adding natural gas from other sources is very limited, because it takes a long time to complete the expansion of the existing route or the laying of the pipeline importing natural gas from Norway and Azerbaijan
As the world's three largest natural gas exporters, Qatari Minister of state for energy affairs Saad sherida al kaabi recently said that Qatar will continue to supply natural gas to Europe. "From a commercial point of view, we will not choose either party," he said in commenting on the Ukrainian crisis. "Although Qatar is willing to increase its supply to Europe, most of its LNG exports are linked to long-term contracts and have been firmly locked. At present, only about 10% to 15% of its inventory can be transferred to Europe."
In this case, the International Energy Agency (IEA) also suggested that the EU consider LNG as a key option to increase supply in the short and medium term. At present, the utilization rate of existing LNG import infrastructure in Europe is close to the highest level.
Alex froley, senior LNG analyst at ICIS, pointed out that Europe should focus on expanding LNG imports on floating storage and regasification units (fsru). This is the fastest development mode of natural gas import infrastructure in recent years. Its key technologies include the use of modified LNG tankers parked in or outside the port. The production process of receiving, storage and regasification has gradually matured and has been widely used in Italy, Croatia, Lithuania and other countries.
Since a typical fsru can bring about 4-6 million tons of liquefied natural gas every year, Europe may need multiple fsrus to completely backfill the missing Russian pipeline natural gas. French gas system operator grtgaz confirmed last week that France could install fsru in Le Havre port Grtgaz added that the fsru connection could allow France to increase its regasification capacity by nearly 4.2 billion cubic meters.
in addition to the Middle East and the United States, the African continent, which is also rich in oil and gas resources, deserves European attention Flory told China business that Africa would be a potential source of natural gas for Europe. He cited a recent example. Eni of Italy plans to launch a new LNG project off the coast of the Republic of Congo in less than two years.
The International Energy Agency (IEA) has also provided alternative suggestions for European energy security. It plans to help Europe reduce its Russian natural gas imports without affecting the implementation of the European green energy plan. Accelerating the development of wind energy and Cecep Solar Energy Co.Ltd(000591) projects is one of the keys. IEA analysis shows that only solving the problem of license approval and issuance may bring additional 20twh power to the European power grid next year. In addition, the investment of 3 billion euros to stimulate the installation of photovoltaic in some residential buildings may increase another 15twh The IEA estimates that these two measures together could reduce the use of 6 billion cubic meters of natural gas. The IEA also recommended that the EU increase the supply of biogas and biomethane, and the EU expects its renewable energy power generation to increase by 15% in 2022.
Nuclear power is also one of the options for supplementary energy supply in Europe. The first financial reporter noted that France has taken a major step in upgrading its nuclear power plan. The country will build a number of new nuclear reactors by state-controlled energy giant EDF. French President macron proposed in February that the existing nuclear power units in France will extend their service life under the premise of meeting safety conditions, and the service life will be extended from 40 years to more than 50 years. In addition, France will build six new nuclear power units from 2028, and the first unit will be put into operation before 2035. On this basis, France also plans to build eight new units and add 25 million kw of nuclear power installed capacity by 2050. At the same time, other EU countries are also accelerating the layout of nuclear power. For example, the Netherlands has expressed its desire to increase nuclear power capacity, and Poland is also seeking to join the nuclear club. In addition, the UK, which has withdrawn from the EU, is planning to eliminate old power plants and build new nuclear power plants. British Prime Minister Johnson said recently that Britain needs nuclear energy to meet its energy supply.
