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Norwegian consultancy Rystad Energy estimates that piped natural gas from Russia to Europe is declining at a rate of 12% per week, though the bloc seems to be well-suited to get through the winter. File photo by Anatoly Maltsev/EPA-EFE.
Jan. 12 (UPI) — The European energy market managed to avoid a severe energy crisis stemming from soaring natural gas prices and dwindling supplies, though the situation remains precarious, Norwegian consultant Rystad Energy said.
The European Union before Russian military forces invaded Ukraine in early 2022 relied heavily on Russian supplies of crude oil and natural gas. Gas in particular became a concern during the early stages of the war given the Kremlin’s tendency to exploit its resource dominance for political gain.
Western sanctions, and the lack of alternatives at the time, caused severe economic strains given the surge in natural gas prices. The Dutch Title Transfer Facility (TTF), used as the European benchmark for the price of gas, peaked at around $365 per megawatt-hour (MWh) in August as Europe scrambled for alternative supplies of natural gas.
Trading in the February contract, TTF was closer to $68 per MWh and spot prices Thursday were around $63.
“Amidst an unseasonably warm winter, recovering nuclear and above normal wind power in Europe, and lower prices across the energy commodity complex, we are set up for a bearish start to 2023,” a research note emailed from Rystad found.
Elsewhere, Europe is making strides in finding alternate supplies. In less than a year, Germany was able to secure an offshore regasification facility that can turn liquid gas back to the gaseous form for use on the grid.
The LNG supply vessel Maria Energy loaded up at the Calcasieu Pass export terminal in Louisiana on Dec. 19, arriving last week at an LNG terminal in Wilhelmshaven for the debut delivery in Germany.
Nevertheless, the situation remains precarious as LNG volumes are now only partially making up for the loss of Russian supplies.
Elsewhere, Norway recently sent more volumes of natural gas to its Hammerfest LNG facility, Europe’s largest, and is expected to increase its market share in Europe from the 29% last year. Rystad believes Norway will be a “pillar” of European energy security this year.
In general, Europe has plenty of natural gas in storage to get through what looks to be a very mild winter. Data from Gas Infrastructure Europe show regional storage levels are more than 80% full, though levels are on the decline.
Russian gas supplies piped to Europe, meanwhile, are declining at a rate of around 12% per week, Rystad estimates.
A dip in gas storage and dwindling Russian supplies, however, should not be a problem.
“Lower Russian pipeline flows are unlikely to cause much concern as the European market has long prepared for those volumes to drop to zero,” Rystad’s report read.
