Tight gas supplies are a long-term trend

(Whether the supply of natural gas will be tight for a long time is a question we have been paying attention to. We also pay attention to the new reports. We can understand the content together.)

Europe, which has been Mired in a gas price crisis this year, was dealt another blow as German gas futures jumped 11 per cent to 88 euros per megawatt hour on news of the suspension of the nord Stream 2 pipeline certification process, trading near Z highs of the past month.

Nord Stream 2 natural gas pipeline is a joint project proposed by Russia Germany in September 2015 to build a natural gas pipeline Russia to Germany under the Baltic Sea. Russia previously had a gas pipeline to Europe called Nord Stream. A second Nord Stream 2 pipeline is intended to run parallel to Nord Stream, bypassing Ukraine carrying Russian gas directly to Germany through German mainline pipelines to other European countries.

The two sides plan to carry 55 billion cubic meters of gas a year Russia to Germany once the Nord Stream 2 pipeline system comes into operation in 2019, which could meet 10 percent of Europe's gas demand.

However, due to the OBSTRUCTION sanctions of the United States, as well as the opposition of some central Eastern European countries, such as Ukraine Poland, on the grounds that the project "will strengthen the EU's dependence on Russian gas damage the interests of the EU as a whole", the delay has been opened so far.

The suspension of the certification process is another setback for the troubled project has exacerbated the energy crisis by sending gas prices soaring in Britain continental Europe.

European gas prices have soared tenfold this year. European gas prices have soared for a number of reasons.

The slight containment of the epidemic is an important factor behind the tight supply of natural gas the rising price of natural gas. Since the outbreak of COVID-19 in 2020, global economic development has been greatly hindered, both import export domestic trade of countries have been hit hard. As the epidemic has been brought under control, European economies have begun to pick up energy demand has increased, inevitably tightening the already tight supply.

Global gas supplies are tight prices are rising as demand increases due to abnormal weather conditions. On the one hand, weak upstream investment falling oil prices have led to a decline in global natural gas production, which fell 3.6% in 2020. On the other hand, the abnormal climate many European countries gas consumption sharply increased, forced to draw on stocks, causing market volatility.

Runaway inflation as central banks around the world print money has also fuelled gas speculation. Spurred by this, oil, copper other commodities prices have risen this year, particularly inflation in European countries. Eurozone inflation hit a 13-year high of 3.4% in September energy prices in the region rose 17.4% year on year, data showed. Speculation has tightened gas supplies.

However, structural changes in global energy are the root cause of tight gas supply soaring prices. Natural gas has the inherent advantage of clean efficient, according to the calorific value per kilogram of combustion, coal 20.93 mj, oil 41.87 mj, natural gas 38.97 mj; According to the combustion efficiency, coal oil are completely burned, natural gas is completely burned. Under the impetus of energy transition, many countries around the world regard natural gas as the transition energy instead of coal. 2009 to 2020, global gas consumption surged by 30%, according to the data. Demand continues to grow, natural gas supply is tight, the price continues to rise is an inevitable trend. Energy consumption is more dependent on natural gas, Europe, which relies entirely on external supplies, faces shortages.

Despite the global natural gas proved reserves far the desired level of the development, the global average gas store than up to 59 years, abundant reserves of natural gas industry rapid development provides a solid foundation, to meet human demand for natural gas is a problem, but, just as Russia macro consulting company chief executive points out: "No matter how you look at gas, it will be a key transition fuel in the coming decades as major economies commit to carbon targets. Gas prices are more likely to remain high in the medium term rise in the long term."

Europe's gas shortage does necessarily mark the end of the era of cheap global gas, but it is certain that tight gas supply is a long-term trend, the era of higher energy costs is coming, which will inevitably drag down the global economy.

China's external dependence on natural gas has exceeded 40% at present, but the demand is still growing, the risk of safe supply is increasing. In terms of supply mitigation risk mitigation, it is expected that the domestic oil gas industry, especially the central enterprises, will intensify exploration development of domestic natural gas resources, increase storage production, achieve a proper balance of quantity, efficiency sustainability on the premise of coordinating domestic foreign resources exploring domestic international markets.

For more information about energy trading platform, please consult Eurasia International Energy Trading Market Management (Jiangsu) Co., LTD., the manufacturer of financial service platform, storage logistics platform, dangerous chemical business license application platform bulk energy trading platform.

Source: Global Weekly, Sinopec News

Disclaimer: The article is Global Weekly, a Chinese petrochemical newspaper. The dissemination is for reference only does imply that the company endorses its views is responsible for their authenticity, nor does it constitute any other recommendation. If you find any works infringing your intellectual property rights on the official account, please contact us we will modify delete them in time