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ISSN 2753-7757 (Online)

Possible 30bn cm European gas supply-demand gap predicted

16/11/2022

Aerial shot of LNG ship docked at terminal in Greece Photo: Adobe Stock
Revithoussa LNG terminal, Greece – China’s lower LNG imports this year have been a key enabler of higher LNG availability for Europe to compensate for the drop in gas deliveries from Russia

Photo: Adobe Stock

Europe could face a gap of as much as 30bn cm of natural gas in 2023, during the key summer period for refilling its gas storage sites, the International Energy Agency (IEA) has said in new analysis.

The research shows that gas storage sites in the European Union (EU) are now 95% full – putting them 5% above the five-year average fill level. However, the cushion provided by current storage levels, as well as recent lower gas prices and unusually mild temperatures, should not lead to overly optimistic conclusions about the future, the IEA has cautioned.
 

The process of filling EU gas storage sites this year benefitted from key factors that may well not be repeated in 2023. These include Russian pipeline gas deliveries that, although they were cut sharply during 2022, were close to ‘normal’ levels for much of the first half of the year. Total pipeline supply from Russia to the EU in 2022 is likely to amount to around 60bn cm, but it is highly unlikely that Russia will deliver another 60bn cm of pipeline gas in 2023 – and Russian deliveries to Europe could halt completely, the IEA has warned.
 

Furthermore, China’s lower LNG imports in the first 10 months of this year have been a key enabler of higher LNG availability for Europe to compensate for the drop in gas deliveries from Russia. If China’s LNG imports recover next year to their 2021 levels, this would capture over 85% of the expected increase in global LNG supply. Global LNG supply is expected to increase by only 20bn cm in 2023, with about one-third of the growth coming from the US. The expected rise in global LNG supply next year is about half the average increase during the 2016–2019 period and much less than the likely decline in Russian pipeline deliveries to the EU next year.
 

In the event of a full cessation of Russian pipeline gas supplies to the EU and a recovery of Chinese LNG imports to 2021 levels, the analysis shows that Europe could face a challenging supply-demand gap of 30bn cm during the key period for refilling gas storage in the summer of 2023. This gap could represent almost half the gas required to fill storage sites to 95% capacity by the start of the 2023–2024 heating season.
 

IEA Executive Director Fatih Birol, says: ‘With the recent mild weather and lower gas prices, there is a danger of complacency creeping into the conversation around Europe’s gas supplies, but we are by no means out of the woods yet. When we look at the latest trends and likely developments in global and European gas markets, we see that Europe is set to face an even sterner challenge next winter. This is why governments need to be taking immediate action to speed up improvements in energy efficiency and accelerate the deployment of renewables and heat pumps – and other steps to structurally reduce gas demand.’
 

EU to accelerate renewables permitting
Meanwhile, the European Commission (EC) has proposed a new temporary emergency regulation to accelerate the deployment of renewable energy sources, part of the EU’s plan to end dependence on Russian fossil fuels.
 

The regulation will apply for one year, and will enable fast-tracking of permitting procedures to accelerate the rollout of specific technologies and types of projects which have the highest potential for quick deployment and the least impact on the environment.

 

Under the proposal, renewable energy plants would be presumed to be of overriding public interest. This would allow new permitting procedures to benefit with immediate effect from a simplified assessment for specific derogations foreseen in EU environmental legislation.

 

The proposal will also grant faster permit procedures to accelerate the pace of the installation of solar equipment on buildings. The EC is proposing a maximum deadline of one month for the permitting process for solar energy equipment and its co-located storage and grid connections when it is not installed on natural ground.

 

The proposal will also streamline the permit-granting process applicable to the repowering of renewable energy projects by including all the relevant environmental assessments in the new maximum deadline of six months. In addition, it aims to accelerate permit-granting procedures by introducing a three-month maximum deadline and a simplified procedure for grid connection of smaller heat pumps.

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