Under the background of the accelerated accumulation of the risk of Russian natural gas supply interruption, can the "natural gas Marshall Plan" launched by the Biden government save Europe from dependence on Russia and even out of the war of energy? This paper analyzes for your reference.
Q: for Europe, can us LNG replace Russian natural gas? More air sources are required
The new LNG supply in the United States is difficult to fill the supply gap in Russia, and Europe needs to seek more natural gas supply or distort the market structure. Under the accelerated accumulation of the risk of Russian natural gas supply interruption, the United States announced that it would add 15 billion cubic meters of LNG to the EU within this year. However, in order to fill the gap of more than 50 billion cubic meters, the EU must also import more LNG from other sellers such as Qatar. As LNG mostly adopts long-term cooperation and the proportion of spot is small, the substantial increase of EU LNG import volume is bound to bring about the structural transfer of global supply stock and push up the price.
Even if enough gas sources are found, the regional differentiation of EU LNG infrastructure may make the actual gas supply distribution face great challenges. At present, the total idle capacity of EU LNG terminals is about 70 billion cubic meters, and there is room to fill the gap of 50 billion cubic meters caused by Russian natural gas. However, the LNG infrastructure within the EU is unevenly distributed, and the self-sufficiency rate of superimposed natural gas varies greatly, so the actual allocation may face great challenges. Take Germany as an example. Due to the lack of LNG infrastructure, Germany may need to transfer LNG from other member states.
Second question: does the United States increase supply as scheduled and fulfill its commitment to Europe? There are bottlenecks in production and transportation
Whether it is production or export, the actual incremental space of LNG in the United States is relatively limited, which is more likely to be the redistribution of stocks and push up prices. U.S. oil and gas manufacturers' willingness to spend capital remains low, resulting in slow growth of natural gas drilling volume, and the increase of production may be significantly limited in the future. Even if it has the capacity to produce, the liquefaction capacity of LNG in the United States is almost full, and the short-term growth space is very limited. This means that the EU's new LNG imports from the United States are actually more likely to compete with the Asia Pacific region for the share of stock imports, or will further push up prices.
The global LNG transport capacity tends to be saturated and the increment is limited. Combined with the lack of supporting berths in the European Union, it is doomed that American LNG is also difficult to solve the energy war in Europe this year. At present, the number of LNG carriers in the world has reached 621, with a total transport capacity of less than 60 billion cubic meters and almost no idle. Against the background of sluggish investment in global shipyards, the short-term growth of LNG transport capacity may be relatively limited. Considering that there are more than 30 berths for large LNG carriers in the EU and the construction period is at least 4 years, it is difficult to solve the energy war in Europe within the year even if the LNG import is expanded.
Q 3: under the background of gas shortage, can Europe use coal and other energy instead? Facing three constraints
First, the restart of coal power in Europe is contrary to the long-term goal of carbon emission reduction; Secondly, it is difficult for European coal to get rid of its dependence on Russian supply. Although both are fossil energy, coal is far less clean than natural gas. Under the accelerated promotion of carbon emission reduction in Europe, restarting coal-fired power is undoubtedly "reversing". To say the least, even if some EU economies restart coal power as an expedient alternative to natural gas, it is still difficult to get rid of their dependence on Russian supply. Data show that, similar to natural gas, nearly 50% of EU coal imports come from Russia and it is difficult to find alternative sellers.
The greater constraint is that the limited supply of traditional energy is a common problem, and it is difficult to find alternatives. The synchronous high price may evolve into a new normal in the period of energy transformation. Not only natural gas and coal, but also the lack of traditional energy production capacity is the general trend. Considering that energy storage has not been popularized on a large scale, the high volatility of green energy is bound to be difficult to alleviate, or make the synchronous high energy prices evolve into a new normal in the energy transformation period. For economies with fragile energy systems such as Europe, the duration of the energy war may exceed expectations and bring significant medium - and long-term inflation risks.
Risk warning: the impact and duration of the Russian Ukrainian war exceeded expectations; The promotion of global carbon emission reduction is less than expected.
