Page 6 - GLNG Week 28 2022

GLNG COMMENTARY GLNG

What if Nord Stream 1

doesn’t come back online?

COMMENTARY The Nord Stream 1 pipeline closed down on July the Sudzha interconnection point further west.
11 for routine maintenance that was planned Gazprom said at the time that it would be “tech-
well in advance, and which takes place every nologically impossible” to move all the volumes
summer. While under normal circumstances to the other route, however.
the 10-day closure would be no cause for alarm, GTSOU’s CEO Sergiy Makogon told Reuters
European officials have raised the possibility that in an interview in late June that Sudzha’s tech-
Moscow may keep the 55bn cubic metre per year nical capacity was 244 mcm per day, or 89 bcm
pipeline offline for longer, in order to further per year, which if accurate, would mean that
destabilise European energy markets. Ukraine could comfortably handle all the gas
The EU consumed 412 bcm of natural gas in that currently flows through the 55 bcm per year
2021, and Russia covered around 155 bcm of this Nord Stream 1. And much of the gas pipeline
demand, giving it a market share of just under infrastructure in Central Europe and Eastern
40%. However, due to Russia cutting supply off Europe was originally built to handle Russian
to a number of buyers earlier this year for fail- gas arriving from Ukraine, meaning there would
ing to comply with its rubles-for-gas decree, and be fewer technical constraints within the bloc to
a curtailment in supply via Nord Stream 1 last distribute this supply.
month, June shipments slumped to a record low All this suggests that Nord Stream 1’s closure
of 4.7 bcm, or 56.4 bcm on an annual basis. In will have little impact on Russian gas supply,
comparison, deliveries in June last year totalled assuming Moscow does not curtail shipments
12 bcm. via other routes at the same time. After all, in
The good news is that despite this reduction 2021, the EU imported 37 bcm via the Ukrainian
in supply, Europe has so far managed to con- gas route, 33 bcm via Yamal-Europe and 9 bcm
tinue increasing the amount of gas it has storage, via TurkStream. This suggests that there is more
albeit at a slower rate than previously envisaged. than enough capacity to handle Russian supply,
Its underground storage facilities were filled to not only at the present record low level but even
61.6% capacity as of June 9, which is close to the at close to the pre-war level in January.
average utilisation rate for this time of year over
the past decade. If Russia cuts off supply completely
If Nord Stream 1 remains closed, Russia’s Were Russia to completely shut down gas supply
transport capacity would be sufficient to main- to Europe, the situation would be very different,
tain supply at the current low rate. It can send however. Global LNG production is already run-
up to 33 bcm per year of gas to Europe via the ning at maximum capacity. Based on data from
Yamal-Europe pipeline that runs through Bela- the EU and Refinitiv, Europe received an esti-
rus and Poland to Germany, even though this mated 9 bcm of LNG in June, and could struggle
link has mostly been flowing in reverse since the to get any more than 1 bcm extra by outbidding
end of last year, because of curtailments in Rus- Asian buyers.
sian gas supply. The US has said it could deliver some 15 bcm
The TurkStream under the Black Sea can of gas to Europe this year, but the closure of the
carry an additional 31.5 bcm per year, with the 20.4 bcm per year Freeport LNG terminal in
pipeline once again fully operational following early June after a fire may make it difficult for this
maintenance last month. However, one of the target to be reached. The terminal was a major
pipeline’s 15.75 bcm per year pipes is dedicated supplier to the European market, and is not
to supplying the Turkish market. expected to resume normal operations until the
Then there is Ukraine’s gas transit system, but end of the year. There are a number of other LNG
how much Russian gas it is capable of sending projects in the works in the US, but only one, a
depends on who you ask. In May, Ukrainian gas 5.2 bcm per year expansion at the Calcasieu Pass
grid operator GTSOU suspended the flow of LNG terminal, is scheduled for commissioning
gas through its Sokranivka transit point, which this year.
usually accounts for nearly a third of Russian gas Globally, while there was some 190 bcm per
deliveries to Europe via Ukraine. But the oper- year of LNG capacity either under construction
ator said that these flows could be diverted to or approved for development as of April 2022,

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