MOSCOW, March 6. /TASS/. Thanks to the warm weather Europe managed to survive the winter without experiencing significant difficulties with gas supply, but this year it will face a shortage of LNG due to its "flow" to China, analysts at the Energy Development Center say.
"Extremely warm weather helped the EU countries survive the current winter without any serious problems with gas supply. Gas prices returned to August 2021 levels, breaking down the important support level of 50 euros per MWh. However, the forward curve shows a very moderate contango reflecting the expectations of market participants that gas prices have stabilized, and even next winter we should not expect them to rise significantly," the report says.
The decline in gas prices in Europe has already led to the fact that LNG supplies to Asia have again become premium, experts say.
In January-February, the EU gas transmission system received regasified LNG 7% less than in November 2022 (352 million cubic meters per day).
"If such dynamics continue throughout 2023, the EU may be short of about 10 billion cubic meters of gas compared to our December forecast," the analysts say.
According to them, the speed of recovery in China’s LNG demand will be an important factor there. The analysts recall that in 2022 China’s LNG demand fell for the first time in many years, which allowed European traders to repurchase LNG cargo intended for China.
"According to our estimates, a recovery in demand in China at the level of 2021 will "take away" at least 20 million tons of LNG from the market," analysts emphasize.
The weather can also seriously affect the balance of the gas market. The combination of hot summer and cold winter this year may lead to an increase in gas demand in Europe by at least 40 billion cubic meters compared to the baseline scenario, analysts believe.
Shell previously predicted that the global gas market would remain under pressure until the mid-2020s due to increased competition between Europe and China for new LNG volumes. The company expects an increase in LNG supply on the market in 2023 by only 15 million tons. The French energy company TotalEnergies also expects the European gas market to remain under pressure in 2023 and competition for LNG in the world will increase by the middle of the year. Demand for LNG in Europe alone this year may grow by 15-25 million tons, while the world supply of liquefied gas will increase by only 10 million tons.