BAKU, Azerbaijan, Dec.21
By Leman Zeynalova – Trend:
Health and economic issues will have a great impact on European 2022 energy demand, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris) told Trend.
“For 2022 one of the key drivers will be the level of European gas demand. 2021 is of course a very special year with a strong economic rebound after the world recession in 2020 linked to the Covid-19 crisis. It is almost certain that world economic growth will be lower in 2022 than in 2021 but, according to the severity of the health crisis (Delta + Omicron), it could be much, much lower. Health and economic issues will have a great impact next year on European energy demand, including gas demand, and, once more, there is a great lack of visibility. Will we see again lockdowns in many European countries in 2022 as this is the case in some of them now? Nobody really knows the answer to such a question. But this issue will impact gas demand and, of course, gas prices,” he said.
The expert noted that very high gas prices in Europe are the consequence of several key trends.
“First, there is a strong demand for naturel gas due to the strong economic recovery at a worldwide level in 2021 after a recession in 2020. Second, gas supply is constrained and cannot be increased as easily and as rapidly as gas consumption. At the end of the summer 2021 Hurricane Ida led to a fall in oil and gas production in the Gulf of Mexico for instance (the United States is the largest gas producer in the world). Third, on the European market gas stocks are rather low for this period. On any market, if you have a strong demand, a supply which is facing some difficulties and low stocks, the result is clear: higher prices,” noted Perrin.
He went on to add that since the summer European imports of liquefied natural gas (LNG, which is transported by LNG tankers and not through pipelines) are lower than in the recent years due to higher gas prices on Asian markets which are attracting part of the available supplies away from Europe.
“Moreover Russia, the leading gas supplier for European countries, could supply some more gas but is reluctant to do so (even if this country is respecting its contractual commitments) for the time being for both economic and geopolitical reasons. Wind energy was not very generous in Europe, which contributed to the increase in the demand for fossil fuels. And the carbon emissions market in the European Union is generating carbon prices of 50-60 euros per ton in the recent period, which has an impact on the prices of fossil fuels,” the expert concluded.
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