EU countries will need to dramatically increase their imports of liquified natural gas (LNG) in 2023 to grapple with probable shortages arising from severely curtailed Russian flows and growing demand, analysts from commodities trading giant Trafigura Group predict.
Prices for gas in the region will need to remain high to attract LNG away from other buyers across the globe, the analysts said, adding that the security of this supply would remain an issue beyond next winter.
“We expect gas and LNG markets to remain volatile,” the Singapore-based trading house said on Thursday in its annual report. “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.”
The region has been grappling with a serious energy crunch for about a year. The crisis turned from bad to worse due to EU efforts to decrease its energy reliance on Russia, as the bloc imposed several rounds of sanctions on the country – once its major natural gas supplier.
The situation worsened dramatically in early July following the first disruption of Russian supplies to a number of EU countries. The reductions in deliveries were attributed to issues with the maintenance of turbines for the Nord Stream pipeline due to sanctions. The pipeline was subsequently blown up in September, rendering it inoperable.
Imports of LNG have been at record high levels, with American cargoes filling most of the gaps, while more import terminals are set to open across Europe over the coming year. Two-thirds of all US cargoes loaded with LNG will reportedly land in Europe this year, and more would come if it were not for capacity limits at import terminals.
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