Aletho News

ΑΛΗΘΩΣ

Top LNG Producer Qatar Predicts Return of Russian Gas to European Market Within Five Years

Samizdat – 14.01.2023

Gas prices began creeping up in 2021 amid underinvestment in production and fierce competition for limited supplies between European and Asian markets. The supply crunch was exacerbated in 2022, as European countries began rejecting gas from Russia – which accounts for 15 percent of global natural gas output – over the security crisis in Ukraine.

Global instability in natural gas prices and availability won’t be going anywhere in the near term, and Russia will inevitably resume supplying Europe to restore a sense of equilibrium to energy markets, Qatar’s energy minister has indicated.

“It’s going to be a volatile situation for some time to come. We’re bringing a lot of gas to the market, but it’s not enough,” Qatari Energy Minister Saad al-Kaabi said, speaking at an energy forum on Saturday.

Al-Kaabi explained that global energy supply troubles actually started some time before the Ukraine crisis, “where the lack of investment in the oil and gas sector caused really a shortage in gas. And ahead of the Ukraine crisis, the oil and gas prices obviously were clearly going higher due to lack of supply. That lack of investment was driven by many factors, including the bigger push for the green [energy] without having a real plan in how the transition was going to happen. So there was a scarcity of investment over about 5-6 years, and then when the Ukraine situation happened, a big volume was taken out of the market and obviously that would take [prices] even further up.”

Al-Kaabi predicted that the next couple of years would be difficult for Europe, notwithstanding the reprieve granted amid a milder-than-usual winter for much of the region.

“The issue is what’s going to happen when they want to replenish their storages this coming year and the next year. There isn’t much gas coming into the market until 2025, 2026, 2027,” al-Kaabi warned.

The shortages would also mean higher prices, the Qatari official said.

“Prices are a factor of supply-demand. I think some people think that we are very happy for high oil prices and so on. The biggest worry that we would have as oil and gas producers is demand destruction. And you can see that there is demand destruction, whether it’s gas or oil,” he said.

Al-Kaabi also took a jab at Western countries who spent recent years condemning the use of coal for energy on environmental grounds, but turned to the highly polluting resource themselves amid the energy crunch, pointing out that “all the countries that were calling for coal to be stopped are using it at record levels today.”

Buyers Want to Have Their Cake and Eat It Too

Also speaking at the conference was UAE Energy Minister Suhail al-Mazrouei, who echoed al-Kaabi’s concerns about lack of financing in oil and gas, and a basic “lack of understanding what is the future for many countries when it comes to energy strategy – what contributions or what percentages they would have of gas or even the pace of reducing their coal.”

“It’s not clear… And that unclear long-term strategy by many countries put them in a situation where it’s very difficult for them to commit for long-term gas contracts, which has in return made the companies of those who are developing the gas at a very difficult position with their financiers, because they would like to see long-term contracts, and those long-term contracts are not there. Everyone wants to buy, but they want to buy over a two or three year span. And that is not enough for someone to develop gas,” al-Mazrouei said.

Addressing the energy shortages caused by European countries’ politicized decision to reject gas supplies from Russia, the UAE energy minister said the supply crunch was the natural outcome of these policies.

“Of course Russia is a major producer of gas and LNG, and when you shift from one location to another trying to adjust, that takes time. And that’s what happened in 2022 when some of that [Russian] gas had been relocated to another market, and other gas from other markets [was] coming to Europe, especially from the US. But is that sustainable in the longer run? I think you would need more collaboration between the European nations on agreeing on the optimization of the FSRUs [floating storage regasification units, ed.] that are also limited, and also agree on some pipelines. I think that one of the things that contributes to energy security is pipeline gas,” al-Mazrouei said.

Al-Kaabi expressed hope that an “equilibrium” in global energy markets could be achieved after “some kind of a mediation” over Ukraine between Russia and the West, “and the sooner the better.”

“This situation will not last forever, and I understand that the Europeans today are saying there’s no way we’re going back to Russian gas. We’re all blessed to be able to forget and forgive, and I think things get mended with time,” the minister said.

Al-Kaabi clarified that he doesn’t expect countries who relied on Russia for 50, 80, or 100 percent of their gas to return to these same levels of dependence, but emphasized that Russian deliveries will inevitably resume. “They will diversify and they’ll learn from that situation and probably have a much bigger diversity [of supply]. But the Russian gas is going to come back in my view, to Europe. Is it next year, is it in five years, I don’t know, but once this situation is sorted out, and that I think will be a big relief to the whole gas sector, and to the whole market in Europe and will stabilize prices.”

Hypocrisy on Africa’s Energy Needs

Al-Kaabi also addressed the historic underinvestment in energy resources in Africa by Western countries, the World Bank and the International Monetary Fund on the grounds that they failed to meet the criteria of the global green agenda.

“We need growth. One billion people today are deprived of basic electricity that we all enjoy. So we need to be fair. And I think one point I’d like to just add to that on the investment side: it’s very, very unfair of some in the West to say that African countries should not invest in oil and gas and they should remain green or whatever you want to call it while this is God-given wealth that they can create for their national growth for their national growth and for their prosperity, and it is oil and gas that is needed for the world,” the minister said.

Qatar is the world’s fifth-largest producer of natural gas, and the second-largest exporter of liquefied natural gas after Australia, exporting over 106 billion cubic meters in 2021, behind Australia’s 108.1 billion. Doha has announced plans to invest some $45 billion in its maritime fields to more than double production by 2027. The Gulf state ramped up gas exports to Europe through 2022, but warned its European partners that supplies are limited, as much of the new production capacity being brought online has already been reserved by Asian clients.

Russian natural gas deliveries to Europe plummeted last year, with Moscow accusing the Royal Navy of blowing up the Nord Stream gas pipelines running through the Baltic Sea and their combined 110 billion-cubic-meter annual transit capacity. Poland shut down overland pipeline gas deliveries via the Yamal-Europe pipeline. Flows to Europe are now limited to supplies sent through the Soyuz pipeline network, which runs through Ukraine, but have been restricted to between 35 and 43 million cubic meters of gas per day.

January 14, 2023 - Posted by | Economics, Malthusian Ideology, Phony Scarcity, Progressive Hypocrite, Russophobia | , ,

1 Comment »

  1. After five years all broken European companies will be bought by WEF partners. Only then will they restore the gas supply.

    Like

    Comment by Balthasar Gerards | January 15, 2023 | Reply


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: