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Released May 10, 2022 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--More natural gas is coming to the market, though Europe's decision to phase out Russian supplies could leave a sizable gap to fill.
Most major Western economies have opted to pivot away from Russian fuels as punishment for the February invasion of Ukraine. Before the outbreak of war, Russia met about half of the European demand for natural gas. That product moved through the dense network of pipelines running through Europe, including the Soviet-era arteries in Ukraine.
The Nord Stream network--which runs through the Baltic Sea before making landfall in Germany--was among the first scapegoats. The first string of the network was seen as something of a boon to European energy security when it entered into service a decade ago, because it avoids geopolitically sensitive territory in Ukraine.
As the energy relationship with Russia took on more political tones, the second string of Nord Stream was abandoned in large part because of Western-backed pressures. Even before the war, Western leaders had accused Russia of weaponizing its energy abundance for geopolitical leverage. For related information, see March 22, 2022, article - Russia's Nord Stream 2 Pipeline Loses European Investors.
With Western allies now shunning Russian fuels en masse, the Kremlin's war chest is getting depleted. Russia, meanwhile, could be facing a dramatic economic contraction given its reliance on energy exports for revenue.
And it's already clear that Russia's plans for a swift victory in Ukraine are fleeting at best. Russian President Vladimir Putin, meanwhile, has now become something of a global pariah. From U2's Bono to U.S. first lady Jill Biden, leaders are flaunting Russia's strategic errors with high profile visits to Kiev.
But all that comes at a cost for Europe in particular as it scrambles to find supplies that can fill the Russian void.
Those alternatives will need to make their way to Europe largely by sea and largely from the United States, which sits alongside Russia as a world leader in crude oil and natural gas supply.
The U.S. also is expected to become a world leader in shipments of liquefied natural gas. That ascension was supported recently by the start of Venture Global LNG's Calcasieu Pass terminal in Louisiana earlier this month. The facility has 18 mid-scale liquefaction trains and long-term supply agreements with both European and Asian countries. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can click here for a list of related project reports.
But new export capacity from resource-rich United States might not be enough. Rystad Energy, a consultancy based in Norway, said it expects global demand for LNG to reach 436 million tonnes in 2022, though new supplies should reach only 410 million tonnes.
That deficit will be difficult to address given the time necessary to build up new infrastructure.
"For producers, it suggests the next LNG boom is here, but it will arrive too late to meet the sharp spike in demand," said Kaushal Ramesh, a senior analyst for gas and LNG at Rystad Energy. "The stage is set for a sustained supply deficit, high prices, extreme volatility, bullish markets, and heightened LNG geopolitics."
Most new supplies, Rystad estimates, won't be online until 2024. And even with new export capacity in the U.S., those exports could be curtailed by Mother Nature. Current forecasts point to a busier-than-usual Atlantic hurricane season.
Millions of barrels of crude oil can become stranded by hurricanes and the same risk must surely be in place for U.S. exports of LNG. That risk only adds to the uncertainty about future supplies of fuel for the global economy. Energy security is not a zero-sum game.
The Atlantic hurricane system begins in June.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Most major Western economies have opted to pivot away from Russian fuels as punishment for the February invasion of Ukraine. Before the outbreak of war, Russia met about half of the European demand for natural gas. That product moved through the dense network of pipelines running through Europe, including the Soviet-era arteries in Ukraine.
The Nord Stream network--which runs through the Baltic Sea before making landfall in Germany--was among the first scapegoats. The first string of the network was seen as something of a boon to European energy security when it entered into service a decade ago, because it avoids geopolitically sensitive territory in Ukraine.
As the energy relationship with Russia took on more political tones, the second string of Nord Stream was abandoned in large part because of Western-backed pressures. Even before the war, Western leaders had accused Russia of weaponizing its energy abundance for geopolitical leverage. For related information, see March 22, 2022, article - Russia's Nord Stream 2 Pipeline Loses European Investors.
With Western allies now shunning Russian fuels en masse, the Kremlin's war chest is getting depleted. Russia, meanwhile, could be facing a dramatic economic contraction given its reliance on energy exports for revenue.
And it's already clear that Russia's plans for a swift victory in Ukraine are fleeting at best. Russian President Vladimir Putin, meanwhile, has now become something of a global pariah. From U2's Bono to U.S. first lady Jill Biden, leaders are flaunting Russia's strategic errors with high profile visits to Kiev.
But all that comes at a cost for Europe in particular as it scrambles to find supplies that can fill the Russian void.
Those alternatives will need to make their way to Europe largely by sea and largely from the United States, which sits alongside Russia as a world leader in crude oil and natural gas supply.
The U.S. also is expected to become a world leader in shipments of liquefied natural gas. That ascension was supported recently by the start of Venture Global LNG's Calcasieu Pass terminal in Louisiana earlier this month. The facility has 18 mid-scale liquefaction trains and long-term supply agreements with both European and Asian countries. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can click here for a list of related project reports.
But new export capacity from resource-rich United States might not be enough. Rystad Energy, a consultancy based in Norway, said it expects global demand for LNG to reach 436 million tonnes in 2022, though new supplies should reach only 410 million tonnes.
That deficit will be difficult to address given the time necessary to build up new infrastructure.
"For producers, it suggests the next LNG boom is here, but it will arrive too late to meet the sharp spike in demand," said Kaushal Ramesh, a senior analyst for gas and LNG at Rystad Energy. "The stage is set for a sustained supply deficit, high prices, extreme volatility, bullish markets, and heightened LNG geopolitics."
Most new supplies, Rystad estimates, won't be online until 2024. And even with new export capacity in the U.S., those exports could be curtailed by Mother Nature. Current forecasts point to a busier-than-usual Atlantic hurricane season.
Millions of barrels of crude oil can become stranded by hurricanes and the same risk must surely be in place for U.S. exports of LNG. That risk only adds to the uncertainty about future supplies of fuel for the global economy. Energy security is not a zero-sum game.
The Atlantic hurricane system begins in June.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
