Posted on 09/24/2022 9:27:18 AM PDT by BeauBo
“Europe has already signed long term contracts with new suppliers.”
“Which ones, for how much, and when will they have additional LNG the export capacity on-line? Not Cutter, not Algeria, maybe US?”
Qatar, Algeria and US companies have all signed major new supply contracts with Europe since the war started. They are top ten Global producers, who have the largest capacity, and got the biggest contracts. The USA id the single biggest winner by volume. Azerbaijan and Egypt/Israel have also signed deals that are major increases for them, but smaller slices of the European Market. Norway and the Netherlands (large producers/exporters) have also been big winners from Russia’s former market share, but they are internal to Europe.
German Chancellor Scholz is in the Mid East this coming week, and is expected to sign the last of the major deals to permanently replace their Russian gas supplies. Germany is on track to start up three of the eight new LNG terminals they are getting before the end of this year (before the worst of Winter). Just the one at Willhelmshaven can handle 8% of Germany’s annual use. Other new LNG terminals around the coasts of Europe will also activate before year’s end - about 20 new trains before the end of next year.
The new Baltic Pipe from Norway to Poland starts flowing 10bcm per year to Poland next week, completely replacing what that Country (formerly heavily dependent on Russian supply) bought from Russia last year.
The import infrastructure is really the main constraint, because Europe can simply outbid other customers for the shiploads of LNG. They have been doing that on the spot market, which drove prices way up in the bidding war, when Europe was racing to fill their storage, and Russia was cutting supply early. Now that most of their new LNG supply to replace Russian supply is finally under contract, European purchasers have been buying a lot less on the spot market, and prices there have dropped in half over the last month.
When the sanctions were first imposed, Europe planned to reduce 2/3rds of its gas imports from Russia this year, but Russian cutoffs have accelerated that transition. It is now looking like 90% or more will be replaced this year - maybe all of it.
“they’ll do fine sending pipeline gas to China, and more of that is coming on-line, on a regular basis.”
There is no “regular basis” of increasing transport capacity. They can increase utilization of existing infrastructure up to 100% (nearing that now - about double last year’s shipments to China, which was then about 7% of Russian gas exports), but any new projects are many years away. The only new export capacity they had in development for the near term was one LNG terminal off the Nordstream pipeline near Saint Petersburg. That was accelerated and recently activated, but can only handle about 4% of the volume that used to go through Nordstream.
Last year, 85% of Russian gas exports went to Europe.
Net of European losses and Chinese gains, about 3/4 of Russia’s gas exports will be lost from the start of the war through now - the great bulk of that over the last three months. It is just not going to come back.
Last year, natural gas was about 1/4 of Russia’s GDP (including domestic use). Ripping that out suddenly inflicts further secondary and tertiary economic costs, like suppliers and support services to that industry, wages and the other businesses that were supported by gas industry workers as customers.
Oil was another 1/4 of Russia’s GDP last year, but unlike the stable long term gas business, oil has always been prone to boom and bust cycles, with a major bust cycle approaching fast.
This is a once in a century economic train wreck for Russia. They are more dependent on oil and gas (1/2 of GDP) than Saudi Arabia (1/3), and the rest of their economy has been devastated by sanctions. Agriculture is about the only thing not in near free fall.
Hey yo, I just read that the US is looking for folks who can gauge, and anticipate, and advise on sanctions and to make sure that those sanctions do what they are supposed to do....you know, unlike the sanctions that the West/EU/UK/US/NATO imposed upon Russia that just utterly failed and backfired.
‘US Treasury Advertises for a Sanctions Guru to Avoid Pitfalls’
https://archive.ph/bfHWX#selection-3603.0-3603.61
Woot?!
Russia is going to be bloated with gas.
That’s going to be uncomfortable.
Wasn’t the Syria conflict in part due to needing a gas pipeline from the Persian Gulf to Europe? So without the pipeline they have to use ships which is expensive in comparison.
Analysis: Full gas storage no fix for Europe's winter energy crunch
So they are still looking to cut usage by 15-20% and no doubt, they will still be importing energy throughout the winter, just not from Russia.
So you're saying that the EU base their decisions upon reason?
“European gas storage for the Winter is 90% full.”
“What percentage of the season’s needs are the stored units?”
European gas storage holds about 1/4 of annual use, or about 10 weeks of average peak Winter use.
Even though Russian supply has now cracked below 10% of Europe’s current supply, with some conservation, replacement and alternative suppliers; the Europeans have met their current needs and filled their reserves ahead of schedule.
More alternative supplies are coming on line between now and the end of the year, and even more through next year.
“Russia cannot physically move that gas to new customers for the next decade, if ever. European gas storage for the Winter is 90% full, well ahead of schedule. European natural gas prices are down about half since their peak on August 26th.
Putin pulled the trigger on his energy weapon, and it backfired on Russia. Natural gas was 25% of the Russian GDP last year, and 85% of their exports went to Europe.”
“Except none of that is true.”
It is all true, except the GDP percentage. It should not be total GDP, but rather Government revenues (or also total exports). My mistake. Also, the 90% storage number is rounded, today it is around 89% for Germany, and 87 or 88% Europe-wide - well ahead of schedule, and well over the 80% minimum for Winter. They have been injecting about 1/2 of one percent of capacity per day.
https://www.theice.com/products/27996665/Dutch-TTF-Gas-Futures/data?marketId=5429405&span=2
‘Moscow unveils details of new gas pipeline to China’
“the Soyuz Vostok pipeline is part of the larger Power of Siberia 2 pipeline”
Power of Siberia 2 was planned to go operational in 2030, but its partners withdrew and removed funding after this year’s invasion of the Ukraine.
“Wasn’t the Syria conflict in part due to needing a gas pipeline from the Persian Gulf to Europe?”
Control of energy supplies has been central to Russia’s strategy under Putin, and he has long put a lot of military force behind it.
Europe is getting exactly what it voted for.
Source/Sources given the 9/15/2022 dating of the article I posted which indicates nothing of the sort?
‘Moscow unveils details of new gas pipeline to China’
https://www.rt.com/business/562882-russia-china-gas-pipeline/
Meanwhile my Swedish mother-in-law's power bill is going from 20k krona to 140k krona.
Globaloid mao-maos, like you, exist in some fake news loop.
Yes, but the transport capacity to replace the volumes that were going from Russia to Europe via pipeline (and some by short route LNG ships), to China and India instead, doesn’t exist and will not exist for some time. This has been hashed out repeatedly on FR. Transport capacity is a function of of number of ships (numerator) and time of transport (denominator). Just for LNG (excluding pipelines) time of transport is ~6x. So you need 6x the ships. There is already a shortage of those, and most are not under Russia / Russian allies control.
PLUS, various factor including those long voyages drive up the end cost of the LNG.
This is in play for oil, too. Matter of fact, this article on FR reports that (apparently even with the Russki discount) India has swerved back away from buying Russian oil due to an additional $5-$7 /barrel cost being tacked on.
https://freerepublic.com/focus/f-news/4095558/posts
Nope. Russia is ALREADY exporting natural gas to China:
Russian Gas Pivot Toward China Will Ease Europe's Energy Crunch
Record Russian gas flows to curb Chinese LNG demand:
Russia is boosting natural gas shipments to China as it curbs flows to Europe, a dynamic that may offer some respite from the unprecedented rally in energy costs, according to consultant Accenture Plc.
1) Trump was right. He warned them and they laughed.
2) The UK dropped all restrictions on fracking. The EU should immediately do the same.
What are the actual figures?
1) “average peak Winter use.” I’m not even sure what that is. An average of peaks of some sort? I can think of about a dozen ways to define it. Some sort of worst case scenario? But anyway, a number in bcm of total usage for “winter” is needed.
2) Then, we need to know projected domestic production and imports expected during “winter”. Add that to the storage capacity.
Subtract “1” from “2” to estimate the shortfall, if any.
My guess is that price in wealthy countries will be a bigger issue than actual shortfalls. Poor countries may see actual shortfalls.
I note that various sources report reserves in the US injected very well last week, due to cooperative weather. Our reserves are still somewhat low, however:
We do have a likely hurricane coming in, though. If it smacks a big export terminal, causes coolish weather, or takes down a lot of power infrastructure, but misses most Gulf production, the extra gas goes into storage and drops prices. If production gets clobbered and the other hits are modest, the reverse happens, storage injection falls and prices go up. The former scenario is more typical.
Russia cannot physically move that gas to new customers for the next decade, if ever.
/\
Ha.
Europe maybe.
China and India will take all plus more.
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