Yves here. Gee, the normally upbeat IEA is rattled by all of the energy market anomalies. Notice the remarkable lack of agency! The words “Russia” and “sanctions” appear nowhere in this story! The level of self-censorship is impressive.
A related story, The Spice Must Flow, um, IEA: The World Needs Russian Oil To Flow Regardless Of The Price Cap, by another OilPrice regular, Tsvetana Paraskova, also does quite a bit of tap dancing. Perhaps in this case the two writers are reflecting the sanctimoniousness of the IEA.
The Paraksova piece has the IEA messaging, while pointed avoiding straight talk, that the oil markets can’t take Russia delivering on its threat to withhold supply rather than selling oil at a capped price. For instance:
The global oil market will still need Russian oil to flow even with the planned price cap, Fatih Birol, the Executive Director of the International Energy Agency (IEA), said on Tuesday…
Many analysts and experts doubt that the price cap would serve its dual purpose of cutting revenues for Putin while keeping Russian oil flowing because top importers China and India haven’t signed onto the price cap, and because Putin could simply make good on his promise to halt all energy supply—including crude, fuels, natural gas, and coal—to the countries that sign up to cap the price of Russian oil.
By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice
- The executive director of the International Energy Agency has said that the world is currently in the middle of the first truly global energy crisis.
- Natural gas markets are particularly tight, and they are set to worsen next year as demand climbs and Europe struggles to replace Russian pipeline gas.
- As well as being more expensive than pipeline gas, the lack of infrastructure to import LNG to Europe is resulting in delivery delays.
“The world is in the middle of the first truly global energy crisis,” the executive director of the International Energy Agency, Fatih Birol, said today in Singapore.
The official went on to warn that natural gas and LNG markets would tighten further in 2023, with only 20 million tons of new liquefaction capacity scheduled to come online in that year, Reuters reported.
Speaking at the Singapore International Energy Week, the head of the IEA also said that while supply remains tight, demand for gas will continue to be strong, especially in Europe and possibly in China.
Birol’s warning comes amid expectations that this winter will not be the toughest for Europe. Next winter is believed to be potentially much worse because, during the first half of this year, the EU could stock up on Russian pipeline gas, which is unlikely to come back next year, leaving the EU with a supply gap that other suppliers would be hard-pressed to fill.
Meanwhile, as many as 60 LNG tankers have turned into floating storage off European coasts as there is not enough regasification capacity on the continent to unload the cargo.
This, CNBC reports, is delaying some of the tankers’ return to the Gulf Coast to reload, and pushes gas inventories higher, Andrew Lipow from Lipow Oil Associates told the network.
“The wave of LNG tankers has overwhelmed the ability of the European regasification facilities to unload the cargoes in a timely manner,” Lipow said.
The shortage of LNG import capacity is aggravating Europe’s gas supply crisis but there is no quick solution to this problem except floating regasification units that Germany, for one, is seeking to deploy by the end of the year.
Price is also challenging, with LNG a lot costlier than the pipeline gas Europe was used to. Earlier this month, French president Emmanuel Macron slammed the U.S. for setting double standards in this respect, pointing to how gas cost much less on the U.S. market than on the international LNG market.