One of the world’s largest liquefied natural gas exporters, Qatar, can divert only 10-15 percent of its LNG cargo contracts to other destinations, Qatari Energy Minister Saad al-Kaabi said on Tuesday amid the escalation of the Russia-Ukraine crisis, adding that replacing Russian gas deliveries to Europe in the short term is “almost impossible.”
The energy markets reacted on Tuesday after Russian President Vladimir Putin recognized two breakaway regions in eastern Ukraine and ordered troops in them, with oil prices soaring close to $100 a barrel and European gas prices jumping by double digits, also in view of the news that Germany halts the Russia-led Nord Stream 2 gas pipeline project.
“Russia (provides) I think 30-40% of the supply to Europe. There is no single country that can replace that kind of volume, there isn’t the capacity to do that from LNG,” al-Kaabi said at a gas conference in Doha on Tuesday, as carried by Reuters.
“Most of the LNG are tied to long-term contracts and destinations that are very clear. So, to replace that sum of volume that quickly is almost impossible,” the minister noted.
In Qatar’s case, only up to 15 percent of LNG contracts are divertible, he added.
For several weeks now, as the Russia-Ukraine crisis was brewing, the United States and Europe have been talking with energy companies and major gas-producing countries globally about the potential for a large supply of natural gas to Europe in case Russian deliveries are interrupted.
Talks have even reportedly involved major LNG importers in Asia—including Japan, South Korea, India, and even China—to potentially send some of their gas supply to Europe in case the Russia-Ukraine crisis escalates into a conflict.
In light of the latest escalation, the EU, the UK, and the U.S. are preparing sanctions against Russia, which are expected to be announced as soon as today and could affect Russian energy exports.
By Tsvetana Paraskova for Oilprice.com
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This confirms what I have been saying since the eruption of the Ukraine crisis that the LNG exports of the United States, Qatar and Australia combined could hardly replace the almost 200 billion cubic metres per annum (bcm/y) piped by Russia to the EU in addition to an estimated 15-16 million tons a year (mt/y) of LNG. Only Russia can satisfy the EU’s gas demand.
Moreover, Europe has a limited LNG import capacity. This makes ramp-ups of LNG imports quite useless particularly if they are needed to replace Russia’s 40% share of the European gas market.
The EU will continue to be dependent on Russian piped gas supplies well into the future. On the other hand, Russia isn’t dependent on the EU for its oil and gas exports. It has the entire Chinese market as a destination for its exports.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
The bulk of the winter is past. Winds are picking up and utilization rates for wind generation are increasing (60% in Denmark; 77% in Ireland; almost 80% in the Nederlands; and even over 80% in Poland). Come on March winds! And while the utilization rates for wind generation are much lower in Germany, it is producing over 50% of its current power usage between wind and solar.
My point being that while there will still be a need for gas in Europe and there will still be cold weather to come, the greatest part of the energy crisis is over for the NATO countries.