Will we go cold this winter?

At our AIEN International Energy Summit, energy transition and security are hot topics. We live in a time where Russia has placed European gas supplies into turmoil. But is this solely down to Russia? During a panel discussion, Francisco Maza, LNG & NG Supply and Trading Director, Repsol, argues that one of the reasons we are in this situation is that Europe has failed in recent years to diversify sources of supply.

“Nabucco is not onstream, the trans-Saharan pipeline is not delivering to Algeria, and the available capacity in Spain cannot be connected to the central European gas system,” says Maza. “We have put a lot of focus on energy transition and not paid enough attention to energy security. Europe has failed to put in place a stable, integrated, and efficient gas market.”

There is certainly a mismatch in the market. Dr. Carole Nakhle, CEO, Crystol Energy, the discussion panel moderator says, “There is a disconnect between the gas industry and policy makers with climate change agendas. The focus on energy transition has led to countries wanting to negotiate short-term contracts but increasing gas supplies is a long-term investment and suppliers need the security of demand to make projects viable.”

Whichever way you look at it, gas markets are at the limits of their elasticity and the speed at which Russia has turned off the tap has left us scrambling. Fortunately, gas storage in Europe is currently at high levels, which will see us through the winter. However, we may struggle to replenish supplies next summer, which is ominous for the following winter.

Maza concludes, “We have the means to secure gas supplies, but this will depend on our actions in the years to come.”

There are certainly some interesting times ahead.

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