"EU to Discuss Joint Gas Purchase Plan at Next Month's Summit"

"Energy Package Plan to be Prepared by the 18th of Next Month"
Gas Production Stalls..."Expected to Increase by Only 2.4%"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] European Union (EU) member states are reportedly set to discuss measures for joint natural gas purchases at the summit scheduled for the end of next month. This move is interpreted as a response to the prolonged Ukraine war, which has increased the need to reduce dependence on Russian energy, as well as to prepare for additional sanctions such as energy embargoes.

On the 14th (local time), Bloomberg News cited sources saying, "EU leaders will discuss joint natural gas purchases and energy security issues at the summit scheduled for May 30," adding, "Plans to reduce dependence on Russian energy and measures for energy interconnection and support among member states will be discussed, with the goal of preparing a package plan by the 18th of this month."

According to Bloomberg News, the overall dependence of EU countries on Russian natural gas is about 40%. Western European countries such as the United Kingdom, France, and Spain have relatively low dependence at around 10%, but Germany, Italy, and Poland have about 50%, and Eastern European countries such as Austria, the Czech Republic, Slovakia, and Bulgaria have as high as 80% dependence.

Some EU member states are already reportedly seeking alternative gas import sources separately. According to CNN, Italy recently signed natural gas purchase agreements with Algeria and Egypt, while Finland and Estonia have announced plans to lease LNG carriers to import U.S.-produced liquefied natural gas (LNG).

However, concerns remain that it will be difficult for the EU to immediately find alternative import routes, as major natural gas producers in the U.S., the Middle East, and Africa are unlikely to increase production in the short term. According to The Wall Street Journal (WSJ), JP Morgan Chase forecasts that oil and natural gas producers' output will increase by only about 2.4% this year. WSJ reported that global supply chain issues, declining well inventories, rising drilling costs, and labor shortages are limiting the capacity for increased production.