2023-07-05 15:21:44
Date July 5, 2023 Add Article added Download PDF Share
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The European gas market is experiencing a period of calm marked by a substantial reduction in the price of natural gas. With the drastic reduction in Russian gas exports to Europe, the 27 are turning to other sources in order to secure their supplies.
Without permanent infrastructure to ensure sufficient flow to supply the continent with gas, European buyers prefer liquefied natural gas (LNG), which is easily transportable and produced by many partner countries. Since the end of 2021, European LNG imports have increased considerably in volume, while the United States has overtaken Qatar as the main exporter of LNG to the Union.
The U.S. LNG export sector has seen dizzying growth since 2016, while the construction of new export terminals on the U.S. East Coast — sometimes thanks to European investmentTotalEnergies buys 17.5 % stake in Next Decade for $219mn », Natural Gas WorldJune 14, 2023.”>1 — should contribute to further increase the capacities of liquefaction and export of American natural gas by 2025-2026Can China Compensate Russia’s Losses on the European Gas Market ? », Carnegie Endowment for International Peace, 1er juin 2023.”>2.
The destabilization of global energy markets caused by the decline in economic activity due to Covid-19 and aggravated by the war in Ukraine has led to the strengthening of the presence of China and Europe in global LNG markets.
In 2021, China dethroned Japan from its position as the world’s largest buyer of liquefied natural gas, which the country has held for 50 years.Japan set to cede LNG import crown to China », Nikkei AsiaJuly 2, 2021.”>3. In order to secure their supplies while benefiting from more advantageous prices, Chinese companies are concluding contracts that will bind them for decades. On June 20, the China National Petroleum Corporation signed a 27-year contract with Qatar Energy for the purchase of 4 million tons of LNG per yearQatar strikes second big LNG supply deal with China », Archyde.comJune 20, 2023.”>4. According to data from Bloomberg, Chinese buyers have concluded with foreign suppliers a third of the total long-term LNG supply contracts signed since the beginning of the year. Anxious to ensure its energy security more than anything – even if it means subsequently reselling the surpluses to foreign buyers – China has begun the construction of a dozen import terminals which should allow the country to buy 138 million tonnes of LNG by 2033, i.e. double its current capacityChina Is Buying Gas Like There’s Still an Energy Crisis », BloombergJuly 2, 2023.”>5.
Thus, competition between European countries and China for the purchase of natural gas is intensifying, limiting the purchasing capacity of countries that do not have as many financial resources — such as Pakistan — and giving rise to fears linked to a potential supply shortage. According to Fatih Birol, director of the International Energy Agency, a stronger than expected Chinese economic recovery would lead to higher energy prices in Europe this winter as well as possible power cuts. electricity in the event of a reduction in the flow of Russian gasInternational Energy Agency warns of higher bills this winter », The GuardianJuly 3, 2023.”>6.
Sources« TotalEnergies buys 17.5 % stake in Next Decade for $219mn », Natural Gas WorldJune 14, 2023.Sergey Vakulenko, « Can China Compensate Russia’s Losses on the European Gas Market ? », Carnegie Endowment for International Peace, 1er juin 2023.Ryosuke Hanafusa, « Japan set to cede LNG import crown to China », Nikkei AsiaJuly 2, 2021. Andrew Mills and Maha El Dahan, ” Qatar strikes second big LNG supply deal with China », Archyde.comJune 20, 2023.« China Is Buying Gas Like There’s Still an Energy Crisis », BloombergJuly 2, 2023.Alex Lawson, « International Energy Agency warns of higher bills this winter », The GuardianJuly 3, 2023.
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