Solutions for gas congestion

Slava Kiroshin, DWF’s global energy chief, shares his views on gas congestion in Britain, Europe and other parts of the world. It highlights the issues and short-term and long-term answers. he said:

Years of weak basin investment in the oil (and more gas) sector is building into a global supply crisis. OPEC’s latest decision to increase oil production by 400,000 bbl p / d (and OPEC’s 7 million Bbl p / d) will reduce some of the fears, as the gas situation is different. When it comes to gas, new supply is only expected in the middle of this decade.

Investment in oil and gas has dropped by 33% due to the COVID-19 outbreak, and the IAAA estimates that this has led to a shortage of supplies. An obvious example is the Permian Basin and the American Shale Industry. This has led to a decline in investment. The good news is that gas production can increase relatively quickly by focusing on rapid technological advances and short-term projects. If this happens, there will be a significant increase in exports to ensure adequate profits are exported outside the United States. As one would appreciate, this situation has many “ifs” to make it comfortable in the current state of European gas markets.

At present, European gas reserves do not appear to be ready for the cold winter. Stocks are at an all-time low, which is why prices are rising. On the other hand, the world’s largest importers (China, Japan, South Korea, Taiwan) are already buying gas. Asian importers seem unwilling to make mistakes last winter. Perhaps if Asian imports meet their needs, this could lead to a silver lining. Ask at the beginning of the year and leave enough supply to go back to Europe. This is unlikely to be the highest gas price in Europe for 13 years.

If European utilities compete for a limited supply (primarily LNG), prices will continue to rise. This will inevitably be passed on to consumers. Another point to note is that Asia is not Asia. The demand for gas, and the relative willingness to pay premium, allows them to compete even with European utilities. There is only so much that can be passed on to consumers who have experienced an increase in energy prices in the past.

“What does all of this mean? Well, if it is long and short, if there is no easy winter or easy demand, EU resources should look for alternative energy sources to meet the demand. Although most can read ‘alternative energy sources’ such as ‘renewable’, the energy market could have an alternative meaning – coal. Under the current market conditions, coal is the most economical source of oil and its relative market availability is “much better” than natural. Gas. It should be seen how European utilities increase carbon emissions and consumer sentiment in proportion to the lack of energy (or capacity) of deep carbon sources.

“Unfortunately, there are not enough generations to meet the high demand for cold winters right now until it is renewable. It is also impossible to create enough additional generations in the limited time available. This need. Over the next three to four months, it could have unintended consequences for all industries that have a certain ‘hit’ by those who lose power.

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