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The energy crisis in Europe isn’t over yet, as only the mild weather has helped the continent avoid gas shortages so far this winter, Ignacio Galan, executive chairman of Spanish energy giant Iberdrola, said on Monday.
“As long as energy markets are over-reliant on fossil fuels and exposed to geopolitical events, they will remain fragile,” Galan said, as carried by Bloomberg.
“We should not think that the energy crisis is over for good.”
At the end of last year, the top executives at other European majors, including BP’s Bernard Looney and Eni’s Claudio Descalzi, said that Europe was more or less prepared to face this winter with nearly full gas storage sites and a steady flow of LNG imports.
“But as we said, the issue is not this winter. It will be the next one, because we are not going to have Russian gas – 98% [less] next year, maybe nothing,” Descalzi said at the ADIPEC conference in Abu Dhabi in November.
According to Iberdrola’s Galan, “It is both disturbing and ironic that only unusual winter temperatures driven by climate change saved large parts of the Northern Hemisphere from much more serious threats to energy security and affordability this winter.”
The mild weather at the start of 2023, comfortable gas inventory levels, and still weak demand in Asia dragged European benchmark gas prices down to a 16-month low on Monday. That was due to “ample supply and on reports Chinese importers are trying to divert February and March shipments to Europe amid weak prices at home and high inventories,” according to Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Still, with the plunge in Russian pipeline gas deliveries, Europe will need “huge volumes” of LNG this year, commodity trader Trafigura said in December.
“While Europe should avoid a blackout this winter by drawing on inventories and cutting demand, it will need to import huge volumes of LNG in 2023 given the massive reduction in flows from Russia,” Trafigura said in its annual report for the year to September 30.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,