A top commodity research firm in Norway warns a “perfect storm” is brewing as European energy security worsens following Russia’s invasion of Ukraine, which could result in the tripling of natural gas prices.
“There simply is not enough LNG around to meet demand. In the short term, this will make for a hard winter in Europe.
“For producers, it suggests the next LNG boom is here, but it will arrive too late to meet the sharp spike in demand. The stage is set for a sustained supply deficit, high prices, extreme volatility, bullish markets, and heightened LNG geopolitics,” Kaushal Ramesh, a senior analyst for Gas and LNG at Rystad Energy, wrote.
Rystad Energy said the EU has an “ambitious target to reduce dependence on Russian gas by 66% within this year – an aim that will clash with the EU’s goal of replenishing gas storage to 80% of capacity by 1 November.”
The firm said shunning Russian natgas from the continent destabilizes the entire global natgas market, which had a turbulent 2021 year-end with prices skyrocketing across Europe because of the lack of supplies. EU is currently reducing reliance on Russian natgas and has unveiled the possibility of banning Russian fossil fuels. This will only lead to more trouble for the EU, where prices could rise even higher.