Igor Bokov & Nikolay Makeev
Brussels never tires of repeating that European underground storage facilities are bursting with gas reserves, which clearly demonstrates the continent’s independence from Russian hydrocarbon supplies. True, the accumulated resources of the EU members, who already now have to save literally every cubic meter, will not allow an absolute guarantee to avoid problems with heating and energy supply in the coming winter. Moreover, by buying up “blue fuel” wherever possible, “rich” Europe automatically drives into a corner the “poor” developing countries of the third world, which, due to high exchange prices, are not able to import the necessary volumes of raw materials and are on the verge of a fuel catastrophe.
After restricting gas exports from Russia, Europe, until the last moment dependent on our energy resources by a third, is enjoying its own successes. Every day more and more joyful reports are heard from the countries of the continent about the high percentage of occupancy of underground fuel storage facilities. According to the Association of Gas Infrastructure Operators of the EU, the hidden fuel bunkers of the largest European consumers are almost 100% full. Of course, these are average values: the European elite, Germany, France and Italy, provided themselves with the maximum “blue fuel”, while outsiders, that is, countries that do not have underground hydrocarbon reservoirs, have reasons for concern. For example, the former Baltic countries, the total annual consumption of “blue fuel” together with Finland is about 6 billion cubic meters, depend on one Lithuanian LNG terminal Independence. However, this system is capable of providing slightly more than half of the required energy resources, so these northern European states will still have to negotiate new fuel sources in winter.
However, none of the countries of the Old World, most likely, will remain without gas this winter – there are internal European transport routes through which EU partners will be able to extend a hand of energy assistance to each other.
The same cannot be said about the developing countries, which because of Europe are faced with a shortage of “blue fuel” and are now unlikely to find fuel at affordable prices. According to Bloomberg. Brussels, preoccupied with its own energy security, actually takes away gas from other states, and transfers its own energy problems onto the shoulders of the third world, whose representatives are not distinguished by enviable economic stability anyway. First of all, Thailand, Pakistan and Bangladesh are at risk of being left without gas, but this list will only grow every day. Experts answered about the extent to which Russia can help developing countries with its raw materials.
Artem Deev Head of Analytical Department at A Markets: “The point is not even that Brussels, on the eve of winter and due to the reduction in pipeline gas supplies from Russia, was rushing to buy gas and replenish UGS facilities. The question is the price. Traders, observing the highest level of prices in the European market, preferred to sell raw materials to the EU countries, rather than to other regions of the world. Indeed, in Asia, the cost of LNG is formed by its own market: if it is higher in the Old World, traders will send ships here, and not to other states. Moreover, India, Bangladesh and Pakistan are faced with a situation where they do not receive gas under a previously concluded contract. It is more profitable for a trader to violate it by paying a penalty than to sell the entire volume specified in the contract at a lower cost. This is the problem for poorer countries – there is no shortage of raw materials in the world, just sellers are focusing on Europe, trying to get high profits.
It is technically difficult for Russia to transport gas to other regions, except for Europe and China: several gas pipelines lead to the EU, and Power of Siberia leads to China. LNG suppl-ies remain, but this requires a large-tonnage LNG fleet, which Russia actually does not have. Today, it has only nine LNG tankers, and orders for another two dozen such vessels are in doubt, because a company from South Korea refused to fulfill them against the backdrop of sanctions. The Zvezda shipyard in Russia is also ready to fulfill orders, but in cooperation with the Koreans. So the situation rests on technical complexity – we need an LNG fleet, which, at best, will be created in a few years. And the volume of LNG production in Russia is incomparably less than that of the United States, Qatar or Australia.”
Vladislav Antonov, fina-ncial analyst at BitRiver: “By breaking off energy relations with Russia, Eur-ope has switched to alternative suppliers, including L-NG producers. Those themselves did not expect such a surge in demand from her. They sell gas to those who pay more. Exporters in Qatar and the United States are turning down bids from developing countries and are reluctant to enter into long-term contracts for fear of late payments. As a result, in January-October 2022, LNG supplies to 27 EU member states amounted to 105 billion cubic meters. For the same period last year, the figure was at the level of 64 billion. In the past two months, Russia has been supplying the Old World with an average of 62-72 million cubic meters of gas per day through the Turkish Stream and Ukra-inian transit. On an annualized basis, this is about 25-30 billion cubic meters per year.
It is technically difficult for Russia to arrange supplies to developing countries, since it is tightly connected by gas transmission networks with other regions – Europe, the CIS and China (“Power of Siberia – 1”). The same Pakistan and India are geographically distant from it. And if we are talking about wealthy states, such as Japan and the Republic of Korea, then they are focused on LNG supplies, and the laying of gas pipelines to their territory is seen as an extremely problematic and expensive undertaking.”
