Gazprom accused Europe of destabilizing the global LNG market

The global LNG industry has undergone significant changes due to the growth in demand in Europe, which led to market destabilization and a jump in prices, Gazprom said. In 2022, for the first time in a long time, gas was more expensive in the EU,

The global liquefied natural gas (LNG) industry has undergone significant changes due to increased demand in Europe, which has led to market instability and increased gas prices. This is stated in a press release from Gazprom with reference to a market review prepared for the company's board of directors.

In 2022, for the first time in a long time, Europe experienced a significant premium compared to Asian gas prices. Under these conditions, some suppliers violated their obligations under long-term contracts and redirected LNG tankers to Europe, which provoked crisis situations in a number of countries in the Asia-Pacific region, the Gazprom press service notes. For example, in India, such actions forced the authorities to start rationing gas distribution to fertilizer companies and other industrial consumers.

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According to the research company Kpler, global LNG supplies to 27 EU member countries in January-October 2022 increased by 64%, to 105 billion cubic meters. m. As a result, they were ahead of the world's largest buyer of LNG - CHINA , which in the first ten months of this year purchased only 69.9 billion cubic meters. m against 87.5 billion cubic meters. m for the same period in 2021.

The growth in purchases of liquefied gas in Europe comes against the backdrop of a sharp decline in pipeline gas supplies from RUSSIA (its only supplier is Gazprom), which in 2021 accounted for about 45% of European gas imports and about 40% of consumption. Last year, Gazprom delivered 155 billion cubic meters to the EU and Turkey. m, and this year, according to the International Energy Agency, imports from Russia will drop to 60 billion cubic meters. Russian gas supplies began to fall after the start of a special military operation in Ukraine, the imposition of Western sanctions (they did not directly affect gas), Moscow's demands to pay for gas in rubles, the cessation of transit through Poland and the Nord Stream offshore pipeline, and other interruptions.

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Disruptions in Russian gas supplies and increased demand for LNG led to an unprecedented increase in gas prices in Europe, which exceeded $3,000 per 1,000 cubic meters. m, which is almost ten times higher than the pre-crisis values. Now gas at the Dutch TTF hub is trading at $1,259 per 1,000 cubic meters. m.

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Record gas prices in the world did not lead to an increase in the number of final investment decisions on new LNG capacities, the Gazprom press service notes. The volume of projects for which such decisions were made in 2022 is in line with the average annual rate over the past decade. The implementation of new LNG projects is additionally constrained by the reluctance of buyers, primarily European ones, to enter into long-term contracts, the company says.