Page 29 - bne IntelliNews magazine February 2025

bne February 2025 Cover story I 29
one transit route after Ukraine ended transits in January. TurkStream flows grew by 23% to 16.7 bcm – above its design capacity of 15 bcm. The average daily volume of gas supplies to the EU via Turkish Stream last month was 49.2mn cubic metres.
The pipeline consists of two strands with a design capacity of 15.75 bcm per year (about 43.2 mcm per day) each. One of them supplies gas to Turkey, the other to Bulgaria and further to the countries of Southeastern Europe.
Deliveries into Europe via the European string of TurkStream at the Strandzha
2 entry point on the Turkey-Bulgaria border totalled 15.5 bcm in 2024, up by 22% year on year, reports S&P Global. The main customers of this route are Hungary and Serbia. Total Russian gas exports to Hungary in 2023 exceeded 5.5 bcm and were expected to reach almost 7 bcm in 2024. Russia is currently in talks with Serbia to renew its existing gas deal which expires in March. The last contract for Serbia was agreed in May 2022 for the delivery of 2.2 bcm per year at 100% oil-indexed prices.
Russian gas via TurkStream can also be delivered to Romania, Greece, North Macedonia, and Bosnia and Herzegovina.
Supplies to the EU and Moldova in transit through the Gas Transmission System Operator of Ukraine (GTSOU) of Ukraine in 2024 amounted to 15.4 bcm, which is 6% more than a year earlier.
Bulgaria's Bulgargaz was cut off from Russian gas supplies in April 2022, but Energy Minister Vladimir Malinov said in May last year that there had been
a return of Russian gas to Bulgaria through "intermediary" companies, S&P Global reports.
Gas market to tighten
The moves to impose sanctions on Russian gas exports and the nerves following the attack on TurkStream threaten to cause a tighter global gas market this year, as well as driving up prices in energy-hungry Europe. For the first time since the war in Ukraine
started three years ago, Europe faces the possibility of missing its targets for refilling its gas storage tanks before the start of the next winter.
While Europe has enough gas reserves to get through this winter and prices have eased since the start of the year, inventories are being eroded by cold weather. Gas withdrawals from the tanks are already running ahead of their previous five-year average and the EU
is on track to end the heating season with tanks only 35% full – well down on the 60% full they ended the last season with. That means importing more gas to refill the tanks in 2025 than was needed in 2024.
“There will certainly be an energy
gap in Europe this year,” Francisco Blanch, commodity strategist at Bank of America Corporate told Bloomberg.
“That means that all the incremental LNG that’s coming online this year around the world will go into making up for that shortfall in Russian gas.”
To make up the shortfall, Europe needs to import an extra 10mn tonnes of LNG in 2025, or about 10% more than imported in 2024. And shortfalls
in European gas supply are forecast to persist through to 2027 at least. That will put Europe into increased competition with Asia, the world’s biggest consumer of LNG, that will press prices upwards.
Gas futures in Europe, which typically also have an impact on Asian spot LNG prices, are still about 45% higher than at the same period last year at circa $550 per thousand cubic metres, and triple pre-crisis levels so far in 2025. The LNG market is still relatively youthful, and supplies of LNG are limited, although both the US and Qatar have plans to bring new production online in the coming years.
Global warming is making supplies worse as record high temperatures are driving up demand for power during the summer heat and reducing the surplus gas production available for storage before the heating season starts; 2024 was hottest year in documented history and first ever to see every month above the 1.5C Paris Agreement upper limit. Countries such as Brazil, Egypt and Germany are all exposed to climbing LNG prices due to these problems.
www.bne.eu