If the European Union does not freeze this winter, it will impoverish next one

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Svobodnaya Pressa on the prospects for overcoming the energy crisis in the EU countries.

Alexey Belogoryev noted that the energy crisis has two manifestations: a physical shortage of some kind of energy resource and inadequately high prices for the resource.

- If we talk about the coming winter, then the risks of a physical shortage of gas, at least within the European Union as a whole, have greatly decreased in recent months. In this sense, Europe managed to stop the risks associated with a decrease in supplies from Russia. This was mainly due to an unexpectedly large influx of LNG into the European market.

This was due to two reasons:

• thanks to high prices, the Europeans managed to attract additional volumes to their market, primarily LNG;

• unpredictably unexpected low demand in Asia due to many reasons - from weather to lockdowns in China.

Thanks to this, by the beginning of the heating season, it was possible to accumulate good volumes in UGS facilities, up to 105% on average in Europe.

Accordingly, Europe comes up with good reserves and a fairly stable and large supply of imported gas. Favorable weather and its forecasts until January also help.

We must also add great efforts to reduce demand, especially in industry. They were associated with the costs of business for the purchase of gas, especially in gas-intensive industries, government agencies did something. The effect of this artificial reduction in demand is increasing, although we do not know how this will affect consumption from the heating side, especially by households. There is uncertainty here.

The situation of demand is contradictory, but much has been achieved. If we assume that the supply will remain at the same level as now, and the demand will be at least the same as now, i.e. 5-6% below the long-term average, then the EU will be able to survive the winter without serious crises in physical supply. There may be local crises, because Europe is very uneven in terms of both LNG and UGS terminals, and the supply-demand ratio, there may be daily problems, especially at the peak of demand and towards the end of the heating period.

But all this is done at high prices.