The head of the International Energy Agency, Fatih Birol, warns that tight production capacities for liquefied natural gas could lead to bottlenecks next winter.
As gas demand from China starts to recover, competition for LNG supplies will increase, creating the risk of shortages, Birol told Portal on the sidelines of the Munich Security Conference.
The head of the IEA commended European governments for making “many right decisions” over the past year to secure supplies, including building more LNG import terminals. However, he noted that the mild winter has been a godsend for Europe, coupled with the drop in demand in China amid last year’s lockdowns.
“For this winter it is correct to say that we are off the hook. If there are no last-minute surprises, we should pull through… maybe with a few bruises here and there,” Birol told Portal. “But the question is… what happens next winter?”
The official noted that about 23 billion cubic meters of natural gas is expected to be added to the world’s LNG supply this year, which would equate to about 16.8 million tonnes. But even a modest recovery in Chinese economic activity would absorb 80 percent of that additional supply.
Birol then went on to say that this means Europe may be short of gas for next winter, saying: “Although we have enough LNG import terminals, there may not be enough gas to import and therefore there will be for next winter.” not just be Europe”, adding: “It is not right to be relaxed, it is not right now to celebrate”.
Europe will end the winter of 2022/23 with record high gas storage, which in theory means it would have to buy less for the next heating season. Still, last year’s refill purchases included a significant amount of Russian gas that will not be available this year and will need to be replaced.
By Irina Slav for Oilprice.com
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