"This Winter, Historic 'Gas Shortage Crisis' Feared"... Russia's Aftermath of Ukraine Invasion
Natural Gas Importers Stockpile LNG Earlier Than Usual
[Asia Economy Reporter Na Yeeun] Since Russia's invasion of Ukraine, Western countries have been reducing imports of Russian crude oil, raising concerns about a historic level of gas shortages this winter.
Bloomberg reported on the 24th (local time) that as Russia pressures Europe with natural gas export sanctions, European countries are taking measures such as diversifying import sources and pursuing energy self-sufficiency, which is leading to rising natural gas prices.
In fact, the EU announced its 5th sanctions last month banning imports of Russian coal and has been pushing for a 6th round of sanctions targeting a ban on Russian crude oil imports. The plan is to gradually reduce Russian crude oil imports over the next six months and replace them with supplies from the US or Africa starting January next year.
As European countries take countermeasures, natural gas prices continue to rise. The easing of China's COVID-19 lockdowns in the second half of this year is also seen as a factor fueling demand for liquefied natural gas (LNG), while global commodity inflation is considered a negative factor.
For this reason, natural gas importing countries are stockpiling LNG earlier than usual. Bloomberg reported, "Korean and Japanese companies are securing supplies through early next year, and LNG suppliers are diverting shipments originally destined for Asia to Europe, which offers higher prices."
Michael Stopard, Global Gas Strategy Advisor at Standard & Poor's (S&P), explained, "Since there is no remaining production capacity at gas production sites worldwide, Europe and Asia are engaged in a tug-of-war over the available supply."
Valerie Chow of energy research firm Wood Mackenzie also forecasted that as LNG importing countries in Europe and Northeast Asia compete to secure volumes, supply shortages will worsen as winter approaches.
Meanwhile, Kadri Simson, EU Commissioner for Energy Policy, announced plans for joint natural gas purchases by member states before winter arrives. The EU member countries aim to act collectively to increase their bargaining power on prices.
On the other hand, despite these circumstances, Russian President Vladimir Putin stated, "The Russian economy is functioning well despite Western sanctions."
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