HomeMediaLatest NewsAn anniversary of the gas "divorce": Europe coped, Russia will return the lost by 2030

An anniversary of the gas "divorce": Europe coped, Russia will return the lost by 2030

22 February 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Novye Izvestia on the results of 2022 for the European gas market and Russian gas exports to the EU countries:

“The fact that Europe turned out to be ready for extremely high gas prices in 2022 and for maintaining prices at a relatively high level for at least another 2-3 years has turned the whole picture of the world upside down. It is this willingness to endure a period of high prices, despite huge economic losses, is at the heart of the “gas miracle” that happened in Europe in 2022. If it were not for high prices, this miracle would not have happened.

Due to high prices, it was possible to attract many new gas suppliers to the market, primarily LNG suppliers, who otherwise would not have entered this market. Let me remind you that until the end of 2021, the European LNG market was on the margins of the interests of most suppliers who traditionally focused on Asia. It was a market, roughly speaking, of residual consumption, but since 2022 Europe has pulled the blanket over itself. And Asian consumers were unable to compete with it on price. Although non-price factors also played a certain role in reducing demand for gas in Asia, primarily “lockdowns” in China.

In addition, high prices led to a sharp reduction in demand. From August 2022 to January 2023, gas consumption in the EU fell by 19.3% compared to the multi-year averages of 2017-2021. This is even higher than the 15% target that the EU set for itself in early August.

On the other hand, demand was also affected by weather conditions, which became the second factor in the European "gas miracle". Rarely are autumns and winters so mild. You can call it real luck, which was impossible to predict.

The third component of the “gas miracle” is the high level of organization of the gas market from different points of view: infrastructure development, organizational and technical support, market maturity, as well as the readiness of politicians, energy companies, large consumers, and infrastructure companies involved in transportation and storage of gas, to solidarity actions. This has played a prominent role in the past year and will play an important role in the next few years.

Given everything that happened last year, including the Nord Stream explosions, supplies from Russia in 2023 are likely to be around 50 billion cubic meters. That is, Russia will lose about 120 billion cubic meters of export to Europe.

Only in 10 years will Russia be able to restore pipeline gas exports to the level of 2021. And, above all, at the expense of China. But in terms of value, these exports will most likely differ significantly - the revenue and profitability from these deliveries will be lower than from previous deliveries to Europe."

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