The EU states already have to actively empty their own UGS facilities, which they managed to fill thanks to a mild winter – China, which has emerged from the strict covid restrictions, has begun to create major competition in the LNG trading arena.
This was told by the leading analyst of the National Energy Security Fund Igor Yushkov.
“In Europe as a whole, in March, the daily withdrawal volumes were a record for this heating season. I think this is due to the fact that China has begun to draw on LNG for itself. Throughout 2023, prices in Asia are more attractive than in Europe. And that’s where all the LNG goes. And Europe, for its part, is not yet trying to compete for these volumes and pay more, but simply takes gas from underground storage facilities,” Yushkov said.
The European Union will soon face a difficult competition with China for an enviable liquefied fuel, the analyst has no doubt.
“The longer they delay this moment, the harder it will be for them. Because it is not clear what summer will be. Last year, the summer was dry, there was no wind, the hydro stopped because there was no water. Even nuclear power plants were stopped due to the fact that reservoirs designed to cool nuclear reactors dried up. What will happen this summer is unclear. China is gaining momentum in economic growth, pulling more gas. I think if they leave injection into underground storage facilities for July-August and postpone price competition, the more painful it may be for them,” Yushkov said.
As the Russian pipeline “blue fuel” is abandoned, the EU countries have to replace the missing raw materials with liquefied gas. The level of demand for LNG is growing rapidly, and the resource itself does not fall under Western sanctions restrictions, which forces Europe to compensate for the “dropped” volumes of the Russian energy carrier, which were previously supplied through pipes, by all means.
Last month, Russian LNG exports to the European Union managed to break a new historical high – the volume amounted to about two billion cubic meters. As Western experts have already noted, an attempt to get out of energy dependence on the Russian Federation costs the EU billions, which does not prevent Moscow from further transporting energy resources to its territory, increasing its own profits. In particular, as in autumn, The Wall Street Journal (WSJ) announced the existence of a “corner of the energy market” where Russian exports are growing rapidly.
Meanwhile, Russia has become the largest supplier of LNG to China – the Celestial Empire successfully imported about 2.7 billion cubic meters of gas from the Russian Federation. Active growth in exports occurred both through the Power of Siberia artery and LNG tankers – we are talking about almost 2 billion and 770 million cubic meters.
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