The Norway-headquartered energy multinational Rystad Energy published an assessment May 15 that if the European Union target of reducing dependence on Russian natural gas by 66% by the end of this year is achieved, European countries will have gas storage far too low for the winter as of Nov. 1. Liquefied natural gas (LNG), whether from the United States or from North Africa, will not prevent winter heating and electricity shortages, according to Rystad.
“There simply is not enough LNG around to meet demand. In the short term, this will make for a hard winter in Europe,” wrote Rystad’s senior analyst on natural gas and LNG. There will be a boom in LNG, the company says, but it will come too late to supply Europe in the winter of 2022-23, if even in that of 2023-24. The result will be “sustained supply deficit, high, prices, extreme volatility, … and heightened LNG geopolitics.”
In more detail, Rystad said that if Russian gas was phased out by November the European storage at that time would be only 35% full, and completely depleted by Christmas time, and that natural gas prices would then triple from their current elevated levels. “Replacing a significant portion of [Russian exports] will be exceedingly difficult, with far-reaching consequences for Europe’s population.” The company foresaw “industrial curtailments,” and if the winter is severe, “not even the residential sector would be safe.”
Meanwhile, in a sign that companies remain far more sane and practical than the European Commission, Bloomberg News on May 15 carried a report from a source “familiar with Gazprombank” that 20 European companies have opened accounts there to pay in rubles to import Russian natural gas. It said 14 more companies have asked for the paperwork to pay in rubles—a procedure officially sanctioned by the EC.
