Despite targeting Net Zero by 2060, China’s gas demand is expected to rise for another two decades before peaking in the mid-2040s at above 660 bcm. Around half of China’s demand needs to be covered by imports which poses a massive opportunity for Gazprom, Wood Mackenzie says, considering Europe’s demand is currently 520 bcm, and declining fast.
Sizable US LNG supply contracts with destination flexibility are giving Chinese buyers like Sinopec, ENN and China Gas the clout to set up LNG trading desks in Beijing, Singapore and London. Resorting to coal and renewables for power generation at home, as well as CNPC’s higher pipeline gas purchases from Russia help free up LNG for sale abroad.
Russia has threatened to halt gas supplies through the Nord Stream 1 pipeline if the West imposes a ban on Russian oil, as proposed by the US. Deputy Prime Minister Alexander Novak said “a rejection of our oil would lead to catastrophic consequences,” making oil prices more than double to $300 a barrel with stark ramifications on global gas markets.
The Chinese government has diversified energy imports and is boosting domestic oil, gas and coal production to keep prices under control. The People’s Republic imports more than 70% of oil and 40% of its natural gas needs from overseas, but claims the impact of spiralling global prices would be “manageable” as it resorts to coal.
The European Union could curb Russian gas imports by a third within one year by minimizing offtake under take-or-pay contracts and replacing 30 bcm – out of a total 155 bcm of Russian supply – with alternative sources, the International Energy Agency (IEA) reckons. Adding 35 TWh of new renewable projects in 2022 would lower gas-burn by a further 6 bcm.
Germany has decided to fast-track works on two LNG import terminals to reduce dependence on Russian pipeline gas. Chancellor Olaf Scholz said the terminals would be in Brunsbüttel and Wilhelmshaven – for the latter Uniper was asked to revive plans, shelved in 2020. Both terminals could also import hydrogen to fuel the green energy transition.
Germany could soon have its first LNG terminal as Hanseatic Energy Hub, developer of an 8.8 mtpa liquefaction plant in Stade on the Elbe River, will seek planning permission for the €800 million project this summer. “In the most favourable case, the approval process could take one-and-a-half years and then building starts,” said Hanseatic Energy partner Johann Killinger.
Unregulated crypto mining has grown rapidly which risks to disrupt the energy sector in emerging markets, Fitch Ratings warns. Electricity makes up 90% of crypto mining costs, hence Bitcoins are often produced in countries with low cost, state-subsided energy. With 125 TWh electricity demand per year, crypto miners curtail energy supply for local industry.
Russia’s former President Dmitry Medvedev has warned Europe's gas prices could go through the roof after Germany suspended the $11 billion Nord Stream 2 pipeline project over the escalating Ukraine crisis. "Welcome to the new world where Europeans will soon have to pay €2,000 per thousand cubic metres!" he tweeted – suggesting prices will double.
High spot prices are spurring a rise in marketed gas production in the United States to a record 106.6 billion cubic feet per day (Bcf/d). According to government forecasts, production from new wells in the Lower 48 states will more than double to 37.8 Bcf/d, offsetting falling output from legacy wells and lifting total L48 production to 103.7 Bcf/d in 2023.