The EU has sharply increased its purchases of liquefied natural gas (LNG) from the U.S. to replace Russian gas. However, as a result the cost of electricity increases. And the stability of supply is questionable. Having lost the lion’s share of its pipeline fuel from Russia, Europe is once again knocking on an almost closed door.
Exchange gas quotations exceeded 1200 dollars per thousand cubic metres. This is the market’s reaction to the arrival of cold weather: in December, the reserves built up by record LNG supplies in the summer will have to be actively spent.
On top of that, the EU has drastically reduced its wind power generation. This has also led to higher spot prices and withdrawal of fuel from underground storage facilities.
Analysts say that households and businesses across the continent will continue to suffer under the burden of exorbitant energy costs. According to some forecasts, the price of electricity could go up 12-15 times by the end of the year.
Pipeline gas from Russia used to be Europe’s main energy resource. Because of sanctions, supplies have fallen sharply, but the gas embargo was never seriously considered: the shortage is too great. Nevertheless, alternative producers were sought, with great hopes pinned on the Americans.
LNG imports from the US did increase. According to S&P Global, Europe (including Great Britain and Turkey) received 64 million cubic meters from overseas in January-October 2022. For the whole of last year it was twice less, about 30.
Key consumers of US LNG are France, Spain, the Netherlands and the UK. By the end of the year US exports may reach 79 million cubic meters. In 2023, even more is promised.
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