June 4, 2023

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Index – Economy – Putin decided to restructure Europe’s energy supply

The United States is known to have abundant natural gas, most of which is in the slate fields southwest of Pennsylvania. Washington has already significantly increased its energy exports to Europe in the past, and this has only intensified with the outbreak of war. When natural gas prices rise, it is worthwhile for American companies to serve European markets. Foreign exporters have been competing to increase their share of global and European markets for the past few years, and by December 2021, they will finally overtake Qatar and Australia as the world’s largest liquefied natural gas exporters.

There has never been so much LNG outside the United States. We can see that the capabilities are at their peak and most of these are now moving to Europe. But that does not mean the United States can pursue it

Explained to a market player expert code.

Another big problem is that, unlike natural gas and oil, it is not easy to put on ships at sea. The liquefied natural gas (LNG) must first be cooled at the export terminals, after which the liquefied gas must be poured into special tankers. When ships reach their destination, in this case perhaps a Western European country, a separate process at the import terminal is liquefied natural gas restructuring. Finally, fossil fuels must be piped to a European country in short supply.

According to the expert

In this environmental sense, LNG-based gas supply is an incredibly energy-intensive process. Carbon dioxide emissions from pipeline gas supplies may be high.

This is in stark contrast to European decarbonization processes. This is also the main reason why LNG is more expensive than piped gas. Replacing Russian pipeline gas with LNG also means that the average price of gas will be higher. In addition, one problem is that the infrastructure of our continent is not fully designed Inside the continent To supply gas.

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The expansion of the global gas supply is much less in the short term than the oil market, for example, large manufacturers such as Iran or Venezuela have been excluded from exports. An energy expert points out that there is currently no significant surplus in this system.

Analyst says it’s a zero-sum game

If America replaces LNG, it means that this amount is nowhere else.

Developing countries in particular can get less natural gas if European projects are implemented, which in the short term will only be replaced by more environmentally destructive energy, usually coal. All this must be done not only in Europe but also in other parts of the world to reduce the amount of natural gas storage. According to the Hungarian Energy and Consumption Regulatory Authority (MEKH), Hungary has only 1.2 billion cubic meters of natural gas stored after the hot season. There is no example of such a low fee in the last five years – as the Index said earlier Reported.

Whatever the possibility, unfortunately, decisions have been made in the past that the convict is not the worst. Now only a few European countries on the continent are really in trouble. In Hungary, for example, it would not help if everyone warmed up to just 19 degrees next winter. If Russian imports are completely halted, there will not be enough gas for the population or industry.

– Said an expert familiar with the European market during the conversation.

The potential of Europe

According to him, Eastern Europe has many years to acquire non-Russian raw materials – the surplus imports that are available are limited, and the pipelines can only carry US gas from the West to the East. Significant investment. U.S. So far it has been possible to ship to Europe – for example, to South America – there is no such need now due to the weather.

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In February, the U.S. LNG exports reached a record high of 13.3 billion cubic meters per day, and this is the first time tankers have been completely shut down simultaneously at all seven US terminals. However, it will take many years to build new, more efficient, exportable infrastructure, so it is unclear how the United States can deliver on its promise to Europe. As a solution, their Asian partners will have to sell some of their US LNG to Europe.

The presence of LNG terminals in Spain is not a coincidence, as gas pipelines do not go there. Increasing the amount of LNG coming to Europe will require significant infrastructure investment, even where the terminals are located.

These are technical issues that need to be addressed, the answers to which will only be available in a number of years.

Finally, according to the expert, the question again is what Europe needs to address: how much should be spent on LNG terminals, natural gas pipelines, oil storage facilities, technological innovations, because Europe will go for fossil fuels when it wants to. Go green.

In the long run, European buyers have already concluded pre-contracts for US liquefied natural gas. These will only be available for delivery in 2025 or later. In addition, Europe needs to expand its import terminal capacity, Quartz said. The big question is how much gas is actually needed. Not only coal and oil but also natural gas must be eliminated to achieve net zero carbon emissions.

Green energy sources

“I think there is more uncertainty about the future of natural gas demand in Europe than there is globally. While everyone expects global demand for gas to grow, it depends on how aggressively our continent adheres to climate policy in Europe. The expert told our newspaper.

According to the expert, if the goal was to actually reduce CO2 emissions, nuclear power, apart from wind and solar, would have to play a role in the transformation. In terms of size, it would have allowed much faster decarbonization. However, due to other environmental concerns, Europe has voted for gas as an intermediate source of energy. Now there is usually no problem with gas – it will be needed for a long time – but Russian gas can be used as a means of extorting money from Putin.

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