At the informal meeting in Versailles on 10 March, leaders from European Union countries agreed to phase out dependency on Russian gas, oil and coal imports as soon as possible, following the REPowerEU plan presented by the European Commission.
Among the pillars on which the plan is built, there is the diversification of gas supplies, via higher Liquefied Natural Gas (LNG) and pipeline imports from non-Russian suppliers (for example, Germany is already turning to Qatar for LNG imports) and larger volumes of biomethane and renewable hydrogen production and imports.
In an upcoming meeting this week, Reuters reports that EU countries will agree to jointly purchase gas, LNG and hydrogen ahead of next winter. In fact, more supplies will be needed as, according to the Commission’s upcoming legislative proposal, underground gas storage across the EU must be filled up to at least 90 per cent of its capacity by 1 October each year. Currently, storage volumes are at 26 per cent.
“In the gas markets, Europe has options that could result in the continent becoming independent of Russian gas by June,” said Rystad Energy’s CEO, Jarand Rystad.
This is particularly important for those countries from Central and Eastern Europe that rely 100 per cent on Russian gas. For example, Latvia (with 1.1 billion cubic metres – bcm – of gas imported from Russia in 2021), Estonia (2.2 bcm), Bulgaria (2.6 bcm) and Moldova (2.5 bcm).
“LNG imports look set to make the biggest difference, contributing an additional 50 bcm under the EU Commission’s proposal,” Mr Rystad continued.
According to the energy consultancy’s report, if Europe’s current LNG import facilities are run at an 80 per cent utilisation rate, the region could raise imports by about 42 bcm compared to 2021 levels. Lifting utilisation to 100 per cent would be technically difficult but could theoretically provide 76 bcm more per year. Import capacity could be expanded already next year, as it would take an estimated six to nine months to hook up new floating storage and regasification units (FSRUs) to European gas grids. Furthermore, there is also the option of additional gas from Norway at around 16 bcm per year, including LNG volumes from a possible restart of the Snohvit field.
And, as reported by the Centre for Liquefied Natural Gas, the US is the largest current provider of LNG to Europe and with many new projects in the queue for development, it is poised to continue playing a critical role in stabilising global energy markets and providing energy security.
However, despite assuring that the US can easily supply LNG to Europe, Politico reports that gas exporters already operating nearly at capacity and LNG suppliers are largely free to sell their product where they can get the best price. So the situation is going to be a bit more complicated and the risk and fear of a shortage of supplies remain in sight.