The International Energy Agency [IEA] has said that Europe is “not out of the danger zone yet”, warning that 2023 may present a “sterner test” for EU countries as Russian gas exports dwindle and Chinese demand for liquefied natural gas (LNG) rises.
According to a report yesterday, authored by IEA’s executive director, Fatih Birol, the EU could fall short by about 27 billion cubic metres (bcm) of gas next year if Russian gas deliveries drop to zero and China’s LNG imports rebound to 2021 levels.
The region has made “significant progress” in reducing reliance on Russian gas supplies but it is “not out of the danger zone yet”, said the IEA executive director. “Many of the circumstances that allowed EU countries to fill their storage sites ahead of this winter may well not be repeated in 2023.”
The agency said that the risk of shortages can be avoided through “stronger” efforts to improve energy efficiency, as well as use more renewable energy and further diversify natural gas sources.
The report comes before the start of a meeting of EU energy ministers in a couple of days, where they are expected to discuss a potential natural gas price cap.
The report recalled that a move to impose a ceiling on Dutch TTF gas futures, the European benchmark contract, had been rejected by several countries, including France and Spain.
European Commission president, Ursula von der Leyen, said the cap would seek to control “price spikes” without affecting natural gas shipments to Europe.
“The issue is to find the right balance …I very much hope that we will come to a conclusion within the next [few] days,” said Ms von der Leyen during a press conference.
The EC President also spoke about the possibility of entering long-term natural gas contracts with Norway, which has emerged as the EU’s leading gas supplier.
“I would also highly appreciate if there is a possibility to have Norwegian energy supply companies join our joint purchase platform,” she added.
The platform was established earlier this year for the common purchase of natural gas, LNG and hydrogen at stable prices. EU nations have signed several LNG import agreements with the US and Gulf countries over the past few months.
Last week, the UK and the US announced a new energy partnership they said would help reduce Europe’s dependency on Russian gas and oil.
Under what is called the UK-US Energy Security and Affordability Partnership, Washington will export at least nine to 10 bcm of LNG over the next year via UK terminals, more than double the level of last year.