Russia Warns Europe: Getting Winter Gas will be 'Very Difficult'

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Russia's state-owned oil and gas company Gazprom has warned that Europe will find it "very difficult" to fill its gas storage before winter.

The company said on social media: "This will be very difficult to do, given the politically motivated decisions aimed at refusing to import Russian pipeline gas. The volume of gas available on the European market will be greatly affected by competition for liquefied natural gas (LNG)."

Russia cut off most of its gas supplies to Europe last year after it had invaded Ukraine and in response to economic sanctions imposed by the European Union (EU) and the U.S. This led to major shortages and a massive spike in gas prices which in turn sparked very high energy costs for business and households.

In 2021, EU countries imported 155 billion cubic meters (Bcm) of Russian gas, which accounted for about 45% of total gas imports. At the start of the Ukraine war in early 2022, it was 31.3%, according to the EU's statistical body Eurostat. By the end of 2022, it had dropped to 15.8 % and continues to fall. The EU has rallied to find new sources of pipeline gas, increase its imports of LNG and the construction of terminals, while calling on Member States to reduce their use of gas--a move that was successful in 2022 largely due to a milder winter. In terms of gas storage today, EU tanks stand at 56.7% full, which is 20% higher than the average at this time for the past five years. This was greatly helped by lower consumption due to the milder winter.

The International Energy Agency (IEA) warned earlier this year that 2023 would be a tougher year for Europe on the gas front: "The EU's potential gas supply-demand gap could reach 27 Bcm in 2023 in a scenario in which gas deliveries from Russia drop to zero and China's LNG imports rebound to 2021 levels." The EU will add an estimated 40 Bcm of LNG import capacity by the end of 2023, but only around 20 Bcm of additional LNG supply is expected to come onto the market over the course of the year. Chinese import demand was unusually low in 2022, and a recovery in 2023 will intensify competition for LNG cargoes. For additional information, see January 5, 2023, article - Europe Faces Tougher Gas Crisis in 2023. Industrial Info is tracking 146 active LNG projects in Europe with a combined investment value of US$13.7 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the report.

Gazprom's negative comments were timed with the EU's imminent launch of its new purchasing platform for natural gas, AggregateEU. The initiative seeks to coordinate EU action and negotiations with external upstream suppliers to prevent EU countries outbidding each other and using the weight of the EU, as one of the biggest consumers of gas in the world, to achieve better prices.

European Commission Vice President Maroš Šefčovič, who leads the work of the EU Energy Platform, said: "The more participants we have, the higher the chances of finding attractive gas deals. Let us not forget that our energy-intensive industrial sectors have dubbed the past year as a year of survival. High energy prices have forced many to keep production levels below capacity. We must reverse this trend. The EU Energy Platform has been designed to benefit our industry and our households. And it has been developed in collaboration with industry so that it can produce results in record time."

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