BAKU, Azerbaijan, Aug.6
By Leman Zeynalova – Trend:
By the end of 2020, pipeline natural gas (PNG) imports to Europe are likely to remain below the 2019 level, with all PNG exporting countries impacted, Trend reports citing Gas Exporting Countries Forum (GECF).
“PNG imports could be continuously pushed out of the supply mix by LNG imports. However, the contractual obligations of the EU importers under take-or-pay clauses will prevent PNG supply from a larger drop,” the organization believes.
GECF predicts that unlike PNG imports, LNG imports may stay flat or even increase slightly by the end of 2020 because of the global LNG oversupply and narrow price spread between Europe and Asia, with the EU remaining the market of last resort.
Despite the cancellation of multiple U.S. LNG cargoes with due deliveries in summer 2020, LNG supply may approach a 30 percent share in the EU total gas imports across the full year, said the organization.
In any case, global LNG oversupply, combined with high level of gas in storage in the region, will continue to have huge downward pressure on spot prices, according to GECF.
Under this scenario, the biggest winners from the increasing competition between PNG and LNG supplies will be the EU gas importing countries, which will benefit from the plunging gas prices, improved security of gas supply, and enhanced diversification of gas sources and routes, the organization believes.
“The GECF member countries (MCs) will definitely remain the largest suppliers of both PNG and LNG to the EU market. Their share in the EU total gas imports reached 96 percent in 2019, and it is expected to remain over 92 percent in the short term, despite the growing LNG supply from non-GECF countries. The GECF MCs have competitive advantages over other gas suppliers and long-term energy relations with the EU. The GECF MCs are determined to strengthen global energy security as reliable suppliers of natural gas to meet the world’s energy demand, as echoed in the Declaration of Malabo, which was the outcome of the Fifth GECF Summit of Heads of State and Government in Equatorial Guinea in November 2019.”
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