Never ignore red flags in a long-term relation: and before going too personal, its all about gas!
Back in 2004, our Chief Economist at the time, Dr Fatih Birol already warned on Europe’s growing reliance on Russian gas and the need to diversify.
At the time, Russia accounted for around 30% of the EU’s total gas demand.
Despite the supply cuts in 2006, 2009 and the annexation of Crimea in 2014, the EU’s dependence on Russian gas soared to a record of 47% in 2019.
The steep drop in domestic gas production, with the phase-out of Groningen, was a major factor here.
At the same time, the EU’s growing import reliance was not complemented by a comprehensive diversification strategy.
Although, around 50 bcm/y of regas capacity has been added since 2010 -without which the EU would be in a much more vulnerable position today.
This year, we expect Russia’s share to drop to below 25% from 40% last year, assuming that Nord Stream flows remain at their actual levels… this major shift would not have been possible neither without a liquid global LNG market, nor without the EU’s spare regas capacity.
Stay tuned: our Medium-Term Gas Report is coming out tomorrow, with a special focus on the phase-out of Russian gas, in an accelerated and orderly manner. and always watch-out for red flags!
Source: Greg Molnar (LinkedIn)