europe seeks alternative gas supplies

8/18/2019 Europe Seeks Alternative Gas Supplies

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Europe seeks alternative gas supplies

For those in Brussels who want the US to ride to Europe’s rescue and provide an alternative

to Russian gas, Charif Souki’s words will have come as something of a disappointment.

r Souki, chief e!ecutive of "ouston#$ased Cheniere Energ%, which is due to $ecome an

e!porter of natural gas ne!t %ear, was asked if his compan% could reduce Europe’s

dependence on &a'prom, the Russian gas group.

()t’s flattering to $e talked a$out like this, $ut it’s nonsense,* he said. ()t’s so much nonsense

that ) can’t $elieve an%$od% reall% $elieves it.*

"is words came at a sensitive time. +fter Russia anne!ed Crimea in arch and the west

$egan imposing sanctions on oscow, Europe was suddenl% forced to face up to the e!tent

of its dependence on Russian energ% e!ports.

Concerns a$out its e!posure increased in +pril, when ladimir -utin, Russian president,

warned that Russia might halt gas supplies to Ukraine unless action was taken over iev’s

unpaid $ills. /he warning came after &a'prom almost dou$led its price for gas to Ukraine.

Ukraine, the ke% transit route for Russian gas flowing into Europe, looms large in the

continent’s energ% e0uation. Russia sent some 122$n cu$ic metres 3$cm4 of gas into Europe

last %ear, some 56 per cent of overall demand, and more than half of that 7 89$cm 7 passed

through Ukraine.

Brussels has made it a priorit% to diversif% its gas supplies, $ut Europe’s options are limited.

)n the short term, it is prepared for a gas cut#off. +s of mid#+pril, the 98 EU mem$er states’

stores were :8 per cent full, with 58 $cm of gas 7 more than usual for the time of %ear

following a mild winter.

+lso, new interconnectors $etween European countries have made them more resilient.

Connecting pipelines have $een $uilt $etween Romania and "ungar%, "ungar% and Croatia,

Slovenia and +ustria, and -oland and the C'ech Repu$lic. )n late arch, the leaders of

"ungar% and Slovakia inaugurated their own connector.

(Reverse flow* pumps have also $een installed that allow gas to $e pumped west to east.

&erman%’s R;E and -olish state compan% -&556m floating

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li0uefied natural gas 3=


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For anal%sts at Bernstein Research, all this leads to one clear conclusion. *;e continue to

$elieve &a'prom’s most profita$le market is safe,* the% wrote in a recent report. (=ike it or

not, Europe is stuck with Russian gas.*

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Oil: Important policy questions hang over North American self-sufficiency


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)t ma% even align the strategic o$ectives of the US and energ%#hungr% states such as China

in areas such as the iddle East.

Companies in the sector are also predicting that glo$al markets for energ% will continue $e

marked $% escalating demand for fossil fuels, as well as regional im$alances $etween

production and consumption.

B-’s latest energ% outlook, predicting glo$al trends until 9652, suggests Europe’s e!isting

energ% dependence will increase. "owever, it also paints a picture of sta$le energ%

consumption in AEC countries, in part $ecause of increasing energ% efficienc%, in addition

to moderating consumption in developed economies.

Risk, it appears, is shifting east.

China and )ndia lead the list of economies driving a worldwide increase in demand, as +sia

emerges as the world’s dominant energ% importing region.

+ pattern of strong growth in energ% consumption in emerging economies is e!pected to lead

to an overall increase in energ% demand of more than :6 per cent $etween 9619 and 9652,

B- sa%s.

+nd, in spite of attempts $% some industrialised countries to cur$ greenhouse gas emissions,

oil, gas and coal are still e!pected to provide the $ulk of the world’s energ% source 96 %ears

from now.

+s the B- proections show dio!ide emissions will rise $% 9@ per cent over the same period, it

would seem sustaina$ilit% 7 rather than the relia$ilit% 7 of supplies is likel% to $e a $ig part of

assessing future risks.

"owever, the US’s role as a potential supplier, rather than importer, of energ% raises more

0uestions for polic% makers than how much surplus energ% supplies should $e reserved to

$oost homegrown industr% or directed for sale a$road.

+s r ork sa%s (o %ou want to suppl% to economicall% competing economiesG

()f the% are importing their energ%, do %ou want them to $e dependent on our energ%G +re %ou

$etter off making them dependent on usG /he% are going to $e dependent on someone, is it

$etter for them to $e dependent on usG*

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europe seeks alternative gas supplies

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