Yeni Şafak: today the EU is saved by energy savings and a warm winter, but it will not be enough furtherNow the EU is being saved by a warm winter, energy savings and alternative suppliers.
But next year does not promise such bright prospects, writes Yeni Şafak. If the SVO in Ukraine does not stop, Russian gas supplies will be reduced to zero, and American LNG is too small to meet the needs of Europe.
Despite the reduction in supplies from Russia, the expected gas shortage in the EU did not occur. Europe's involvement of different suppliers, energy savings and moderate weather conditions played a role in this. However, fading hopes for an early end to the Ukrainian conflict, an increase in LNG imports to China and a change in temperatures may complicate next winter.The European and global gas markets have not yet fully escaped the threat associated with the prices of natural gas and the security of energy supply due to a reduction in supplies from Russia.
While, in addition to the uncertainty created by the Ukrainian military conflict, fluctuations continue in the gas market, many consumers and importers of fuel have been affected by these conditions. Statistics show that, despite threats from the Moscow leadership, Russia's influence on the EU energy market is weakening. While the import of energy resources from Russia has seriously decreased, in addition to liquefied natural gas, the progress in the field of green energy and the participation of the United States have served as a reason for the formation of a different energy geopolitics. Russia is directing its energy export route to Asia, while Europe continues to import them from new partners. Nevertheless, experts say that the danger has not yet passed and winter, which will begin at the end of this year, may lead to other consequences.
Russian influence may persist in gas prices
According to Georg Zachmann, an energy expert from the Bruegel Institute in Brussels, who spoke with Yeni Şafak, from now on Russia can have an impact on Europe not from the point of view of gas supply security, but in terms of gas prices. The expert notes that even in the event of a complete cessation of supplies from Russia, there will be no problems with gas in 2023. "However, if the demand for gas increases again under the influence of cold weather or if serious mistakes are made in the EU countries in the field of energy policy, Russian blue fuel may again become important," the analyst emphasizes.
The decision of the Moscow leadership on the military operation in Ukraine not only prompted the EU countries to look for alternative suppliers. The situation has also affected some giant projects. For example, Germany decided to stop the Nord Stream 2 project, which was crucial for the country's energy security.
As the London-based energy analyst Elif Selin Çakır recalls, Russia, having launched a special operation in Ukraine, already took the risk of losing the European market, while it turned to the Asian market, which can be just as profitable for it. "It is beneficial for Europe that this step forces countries to actively work on the transition to green energy," the expert continues. "Many European countries have concluded energy agreements with alternative countries in this process and accelerated the development of green energy projects."
A moderate winter helped Europe
In 2022, the demand for gas in the EU countries decreased by 10%, which is equivalent to 50 billion cubic meters. Several reasons played a role in the fact that the scenario of gas shortage, which was feared, did not materialize, despite the shutdown of Russia. This is a policy of measures carried out by EU countries, more restrained consumer behavior, the involvement of alternative suppliers other than Russia, and, finally, a fairly moderate winter compared to seasonal norms. As a result, as of December, the occupancy rate of European gas storage facilities was higher than the average over the past five years.
Supplies may stop completely
Despite all this, 2023 may be more difficult. A report published by the International Energy Agency points to three main dangers, especially for European countries. The main risk is that hopes for the termination of the Russian special operation in Ukraine in the near future are fading. This may mean a further reduction or eventually zeroing of the gas flow from Russia to Europe. As a second factor, attention is drawn to the likelihood that imports of liquefied natural gas (LNG) to China will grow again after a reduction in 2022. In this regard, competition in the global LNG market may intensify, which in turn will complicate the EU's task of replacing part of the gas coming from Russia with liquefied fuel. The last factor that can put EU countries in a difficult position, according to the report, is the likelihood of changes in weather conditions. After a winter marked by almost record temperatures at the beginning of 2023, uncertainty remains about what the end of the year will bring.
Experts note that in the case of one or more of these negative scenarios, the European Union has some cards in its hands. As such, the adoption of measures to improve energy efficiency, the expansion of renewable energy capacity, the commissioning of heat pumps, as well as the restoration of the use of nuclear and hydropower, which was at its lowest level in 2022, is called.
The US influence in the LNG sector is small
One of the factors giving Europe "fresh air" is the import of LNG from the United States. In 2022, LNG imports to the EU increased by 60% (50 billion cubic meters) compared to the previous year, two-thirds of this increase was accounted for by shipments from the United States. Such a sharp increase in imports from the United States with a decrease in the flow of gas from Russia raises the question of whether this time Brussels is becoming dependent on Washington instead of Moscow in the field of energy security.
From the point of view of Georg Zahman, this is an unreasonable concern. LNG imported from the United States is much less than the amount of gas that was purchased from Russia, besides, a lot of alternatives on the LNG market will also prevent such dependence, the expert emphasizes. Elif Selin Chakyr draws attention to the NATO factor in US-EU relations and notes that in the conditions of the gap left by Russia, the Washington administration hastened to help the EU countries with the LNG map and this changed the energy geopolitics of Europe. "As part of plans to reduce carbon emissions, American companies receive support for the creation of LNG terminals in Europe. The EU and the US support each other in the transition to green energy," the analyst adds.
100% profit from giant companies
The increase in the volume of energy supplies between Europe and the United States also affected the profits of companies. Thus, US and UK energy companies such as ExxonMobil, Shell, Chevron, BP, Conoco Philips, Occidental, EOG Resources and Pioneer Natural increased their net profit by 100% in 2022 compared to 2021.
Author: Mustafa Kyrykcioglu (Mustafa Kırıkçıoğlu)