Page 4 - EurOil Week 03 2023

EurOil COMMENTARY EurOil

Gas and panic in 2023

Europe was plunged into its worst energy crisis in living memory last year,
but what is the outlook for 2023?

RUSSIA LAST year was a disaster for Europe as Putin’s the course of 2023,” the IEA said. This is less than
energy war wreaked chaos on Europe’s econo- half the 60 bcm that is likely to be delivered in the
WHAT: mies by sending up gas prices 20-fold, fuelling whole of 2022, which in turn is less than half the
Europe saw gas prices run-away inflation and causing a cost-of-living amount supplied in 2021.
soar to record highs crisis that drove millions into poverty. Europe That shortfall has to be made up somehow.
last year, plunging its needs to act now to avoid a repeat, and possibly Even halving deliveries to 60 bcm drove up
economy into chaos. worse, crisis this winter coming. natural gas prices on European hubs to record
Currently with gas prices below pre-war lev- levels. Month-ahead prices on the Dutch TTF –
WHY: els and storage tanks at over 83% full, the out- Europe’s leading gas hub – averaged over €130
Russia cut gas supply look is less scary. Russian President Vladimir per megawatt-hour ($40 per million British ther-
to Europe substantially Putin lost the winter battle in the energy war mal units) in the first 11 months of 2022, more
last year, but ample LNG but Europe is enjoying only a temporary respite, than seven times as high as the average between
and mild weather have warned the International Energy Agency (IEA) 2016 and 2020, according to the IEA.
mitigated the impact. in a recent report. The sky-high prices caused a huge amount of
Following its invasion of Ukraine, Russia cut damage to Europe’s heavy industry that it is yet
WHAT NEXT: pipeline deliveries of natural gas to the European to recover from. Some factories were forced to
There will be a 57 bcm Union by more than half. Russia’s pipeline sup- close down and it is unsure if they will ever open
shortfall of gas in Europe plies declined from 155bn cubic metres in 2021 again. The EU managed to cut gas demand by
this year, according to to around 60 bcm in 2022, but the agency warns 10% (or about 50 bcm) on average in 2022 but
the IEA. that Russia could send as little as 25 bcm this about a fifth those gains (10 bcm) were because
year. Europe’s energy-intensive industry began to
“Our assumption in this report is that Russian close down, made economically unviable by the
pipeline deliveries to the European Union will record prices. This year industrial gas demand is
fall to zero from the beginning of January 2023. set to be around 20% (or 25 bcm) lower in 2022
If they were to remain at their current levels, than in 2021 because of this effect.
then Russia would supply around 25 bcm over “The fertiliser industry accounts for more

P4 www. NEWSBASE .com Week 03 20•January•2023