Middle East Crisis, Russian-Ukraine War May Trigger Gas Crisis In Europe— German Govt, Others
NEW ORLEANS: The Head of Energy Policy Department, Federal Ministry for Economic Affairs and Climate Action, Germany, Stefan Rolle and the Head of Trading & Optimizing, Gasum, Jouni Liimatta, have said that the crisis in the Middle East and the Russian-Ukraine war may affect Liquefied Natural Gas (LNG) prices in Europe.
The stakeholders gave the explanation during a panel-led discussion at the 20th edition of the Americas Energy Summit, covered by THE WHISTLER.
The panel discussion was on the ‘role of LNG in providing energy security to Europe in the short and long-term.
Stefan said, “I think there are many possibilities that may be realised. For example, a drastic change in demand for energy in East Asia due to a quick recovery of the Chinese economy. Also, the disruptions of important critical infrastructure in some parts of the world not necessarily in Europe but also in other parts of the world.
“This could change the picture, and there are also difficulties which have to be faced and which we cannot foresee. So, they exist.”
Stafen said if Russian LNG had been banned in Europe, there would have been a spike in prices until equilibrium was found.
Liimatta said he is pessimistic about the issue of pricing of LNG in Europe. He said that the crisis between Israel and Palestine as well as the Russia-Ukraine way may way on energy security in Europe.
The crisis between Israel and Palestine had worsened the energy crisis in Europe which was induced by the Russian-Ukraine war.
Recall that in October last year, LNG prices spiked more than 40 per cent to $18.35 amid the Israel-Palestine war.
Liimatta said, “Unfortunately there has been a lot of war ongoing in the world in very critical places and I fear that if the Middle East crisis expands, the Russian-Ukraine war could expand as well. This could change the picture completely. So, I’m not seeing any positive surprises coming on.
“It is more pessimistic to me. If there are prices, it will be pessimistic. We are already seeing a couple of gas pipelines exploding or being damaged in Europe. Hopefully let’s say the Norwegian Continental Shelf Pipeline continues to Europe, but if something happens to those, we will have a huge crisis in Europe. Unfortunately, negative gas prices could happen.”
According to him, placing a ban on Russian LNG by European countries will take time due to challenges in individual countries.
Liimatta argued that although the Russian LNG contributes about 8 per cent of the whole gas supplies to Europe, it would take time for European countries to ban the commodity.
He said, “Realistically, even though the Russian LNG is only around 5-8 per cent of the whole gas supplies to Europe, it will take until 2025 or 2026 for it to be banned because that is when new LNG [productions will be going on into the market from US or Qatar.
“So, unfortunately, the Russian LNG will probably still come to Europe for another year or two.”