European gas crunch can grow into global crisis – Rystad Energy VP

Oil&Gas Materials 6 October 2021 11:00 (UTC +04:00)
European gas crunch can grow into global crisis – Rystad Energy VP

BAKU, Azerbaijan, Oct.6

By Leman Zeynalova – Trend:

The ongoing European gas crunch can grow into a global crisis, Vice President for Gas Markets with Rystad Energy Sindre Knutsson told Trend.

“The high gas and LNG prices are causing Asian importers to not only rely more on coal, but also on oil for power generation. For countries that can’t afford the current price (South Asia) may have to stop power supplied. In China, the government is likely to cut supplies to the industrial sectors to ensure gas for heating homes if the winter turns out the be cold. This has happened before, and can happen again. As such, I think we can say that this can develop to be a global crisis,” he said.

Knutsson noted that the market is likely to see an improved market balance after the next winter.

“If the winter turn’s out to be cold, the deficit will last far into 2022. However, weather aside, we see new more supply coming into the market next year. The Start up of Nord Stream 2 (Q1/Q2 2022) and increase in LNG supply (+20Mt in 2022) will fundamentally ease the upwards pressure on prices. However, we expect the winter to remain tight,” noted the analyst.

As for the possible role of the Gas Exporting Countries Forum (GECF) in balancing the gas market, Knutsson pointed out that the spare capacity on gas and LNG is very different from oil so the GECF will unfortunately have limited with ability to ramp up supply in order to balance the gas market in short-term.

“The world’s biggest LNG exporter, Qatar, is already exporting at max capacity. Other member countries will also have limited potential to increase either driven by maturing upstream assets (e.g. Trinidad) or gas deficits domestically (E.g. Egypt – Exports are running at low utilization rates),” he concluded.


Follow the author on Twitter: @Lyaman_Zeyn