BAKU, Azerbaijan, March 26. The current tightness in the European gas market will persist until new liquefaction terminals are in place, Marco Saalfrank, Head of Continental Europe Merchant Trading and Member of the Management Board of Axpo Solutions AG said, as he was addressing panel discussions during FT Commodities Global Summit, Trend reports.
“Let me mention two aspects about Europe. The first one, an obvious one, Europe depends heavily on liquified natural gas (LNG). The second aspect, which is also very important, Europe lost a lot of flexibility in the last year, not only due to the war. First, on the demand side, due to the energy transition, Europe decommissioned about 60,000 -70,000 MW of coal-fired power plants. So, in Europe, it's no more so easy to switch from gas to coal and back to gas. On the supply side, also if we are looking at the domestic production in Europe, there is a continuous reduction of the domestic production,” he explained.
Saalfrank noted that as for the storage, clearly, it's more difficult to store gas in Ukraine.
“Europe has no buffer anymore, so when Europe needs gas, needs LNG, the market has to react in price and to attract this LNG. This is the main reason we see this high volatility at the moment in the market. At least we expect that this tightness will persist until we see new LNG in the market, until new liquefaction terminals are in place. Fortunately, there are a lot of projects, especially now in the US. There will be certain delay on these projects, but there are a lot of liquefaction terminals starting operation, and this will reduce for sure the tightness,” he added.