The struggle between Europe and Asia for LNG could turn into a global energy crisis

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the weekly magazine Profile on the prospects for competition between Europe and Asia for limited LNG resources.

Will Europe be able to take gas from Asia

In the so-called low season, Japan and Korea were ready to give up part of “their” LNG to Europe, but now, according to Alexey Gromov, they do not want to do this. They can be understood: winter is coming, they need to take care of their own energy security and provide fuel for the economies. Another question is that not everything will depend on the will of the Eastern states. Extremely high prices in Europe make traders seriously think about whom to give preference to. Since mid-August, gas futures in the EU have been holding above $2,400 per cubic meter, and at the moment they stepped over the $2,600 mark.

“This is significantly higher than in Asia, so we are already seeing signs of competition for limited LNG volumes,” the analyst explained.

As Alexey Gromov noted, the Europeans will have enough stored gas to pass the heating season only if supplies via Nord Stream are resumed in the volumes that were before the start of the saga with the turbine sent for repair and not returned. Now the gas pipeline is operating at only 20% of its capacity, and the Old World turned out to be completely unprepared for such a turn of events. To stand only on LNG and underground reserves, even taking into account 15 percent savings, at the very least, will be possible only with a very mild winter.

The third world that has already lost

And the undisputed losers in this situation, according to Gromov, will remain the states that have relied on LNG, but are not used to such high prices. These are Bangladesh, Pakistan and even India, which some experts call a superpower without five minutes.

For them, fuel shortages will risk energy crises, blackouts, and an incentive to restart or increase the use of cheap and dirty energy sources such as coal and biomass.