In the realm of energy production, investment volumes in the gas sector have fallen short of what is needed. As a result, the push to build LNG terminals by European authorities is unlikely to fully resolve the region’s energy scarcity. This assessment comes from Kirill Polous, head of Gazprom’s energy department, as reported by Interfax.
Confronted with gas shortages, European firms are actively expanding their LNG receiving capabilities. Yet this drive can be seen as trying to quench a drought with a limited resource, a metaphor Polous uses to describe efforts that may not align with long term energy adequacy.
Polous notes that rising demand for liquefied natural gas in Europe has pushed global prices higher for this fuel. This situation forces regional authorities to acquire LNG at elevated, sometimes unusual, costs, complicating budget planning and market stability.
He adds that gas shortages in the European market have already shifted trade patterns and lifted prices worldwide. For the first time in years, a surge in European gas demand has created what he terms a European price premium, reflecting the extra cost of delivering LNG to Europe.
As of December 14, Alexei Grivach of the National Energy Security Fund indicates that France and Spain have become the leading European importers of Russian LNG. From January through September 2022, these two countries together received roughly 60 percent of Russia’s LNG shipments to the European Union, totaling around 12 million tons, underscoring the region-wide reliance on Russia as a key supplier.