Removing Russian energy supply from Europe is equivalent to taking China out of the LNG market, Poten & Partners forecasting manager Kristen Holmquist said after Gazprom announced it is cutting gas supplies to Poland and Bulgaria.
Speaking in a webinar, Holmquist said Russia’s share of Europe’s energy needs now equates to about 77m tonnes of LNG equivalent volumes or around 20% of LNG export market which Poten is forecasting for 2022.
“Put in that perspective you can really see the kind of chaos that would ensue if we see Russia cutting larger and larger volumes out from Europe,” she said.
The Poten forecaster said the amount of energy lost from Russia’s move to cut gas supplies to Poland and Bulgaria is “unexpected but relatively minor”.
“But in terms of numbers to the entire market there is still a lot more damage that can be done,” Holmquist said.
Poten analyst Jon McDonal said it is not feasible to use LNG as a substitute for Russian energy, because there is not enough global supply and export infrastructure.
He said US exports have really been “humming” in the first few months of this year.
Poten is forecasting US LNG exports at 81m tonnes in 2022, although he acknowledged that there could be some downside risks on this figure.
McDonald said Russian LNG exports have increased by around 10% this year over those in 2021 with plants running at 130% of nameplate capacity.
In the first half of 2022, Poten forecasts Russian exports at 10.5m tonnes compared to 9.7m tonnes in 2021. Some 2m tonnes of Russian LNG arrived in Europe in March.
But he said Yamal LNG cargoes would soon switch to Asia once the Northern Sea Route opens.
McDonald said global LNG imports are forecast to grow by 6% in 2022 despite the high prices. He said much of this would be in Europe and the Mediterranean and has already occurred.
He said European import capacity is running at very high rates, at 200% in some cases. But volumes are expected to swing towards Asia as buyers there move to restock.
McDonald said Poten is forecasting European LNG imports at about 100m tonnes in 2022 but added that this could change if Russia cuts more gas supplies.
The Poten analyst said LNG exports from Russia have not been negatively imported by sanctions and up in first four months of this year.
Holmquist said there has not been a huge shift in where Russian LNG is going, with Europe getting more supply in winter when the NSR is closed to vessels moving cargoes to Asia.
She said Belgium and France have taken more Russian LNG after the UK’s ban on Russian shipments. Instead the UK is taking more volumes from the US.
In Asia, there has been a slight shift with more volumes from Russia’s Sakhalin II project going to China, over Japan, South Korea and Taiwan.
Holmquist said one fallout from the current situation is that coal, which is easy to import and stockpile, has become resurgent with talk that some coal-fired power plants could be recommissioned.
She said people are buying gas but there is a limit on LNG terminal capacity with all the slots booked in Europe and cargoes being diverted to Asia.
