BAKU, Azerbaijan, March 10
By Leman Zeynalova - Trend:
The world is entering a prolonged period of high energy prices, Charles Ellinas, CEO of Cyprus-based energy consultancy e-CNHC told Trend.
Talking about the US ban on oil imports from Russia, Ellinas noted that this decision already has an impact on the market and will further have.
“It provides a lead and the pressure on others to follow will only but increase as the turmoil in Ukraine unravels. Markets hate uncertainty and the uncertainty of further sanctions keeps energy prices high. The EU plans to reduce Russian gas imports by two thirds by the end of this year through a combination of measures that include diversifying gas supplies through increased imports of LNG, but also piped gas - from countries other than Russia - nuclear, coal and renewables. It is also aiming to become completely independent from Russian fossil fuels well before 2030 by investing in renewables, hydrogen and energy efficiency,” notes the expert.
Ellinas noted that the acceleration of Iranian nuclear deal would be the logical development, especially as the two sides were getting closer.
“But it appears that new Russian demands may now make this difficult. In any case there still appear to be some stumbling blocks. In the short term, Europe is looking mainly to US and Qatar for additional LNG supplies and to Norway, Algeria and Azerbaijan for piped gas. In the US shale drillers are rushing to increase production to cover any shortfalls in oil supplies. OPEC has said that it is sticking to its plans, but there are increasing signs that if need be Saudi Arabia may step in and provide some relief. Astonishingly, Venezuela may also be another source of additional oil,” the expert said.
Ellinas notes that the danger with all these rapid developments and escalating sanctions is whether it will come to a point that Russia applies an embargo on oil and gas supplies to Europe.
“Even though seemingly remote, such an action would send oil and gas prices to new highs, with $200/b oil not unthinkable. Whatever happens, we are entering a prolonged period of high energy prices that may well last for the best part of this decade, with huge economic and social implications. For now, volatility and uncertainty reign, with no easy answers available,” said the expert.
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