Entso-e, the association of EU transmission system operators, released a report on Monday evaluating bidding zone configurations with the purpose of establishing “optimal bidding zone configurations in Europe to maximize economic efficiency and cross-zonal trading opportunities, while maintaining security of supply.”
It is impossible to say for how long China’s LNG imports will remain subdued, so this is really an opportune time for European buyers to strike years-long deals for liquefied gas. Over the short term, Europe will likely avoid stratospheric gas prices as it starts replenishing its gas inventories—these are currently so low that the continent will need to buy an additional 20 million tons of LNG this year, according to Reuters calculations cited by Bousso in his column. That translates into some 250 cargos, which, thanks to China’s weaker demand, will be more readily available for European buyers.
Nord Stream 2 was never put into operation after Germany axed the certification process following the Russian invasion of Ukraine. Russia, for its part, shut down Nord Stream 1 indefinitely in early September of 2022, claiming an inability to repair gas turbines because of the Western sanctions.
The eight OPEC+ countries that pledged additional voluntary output reductions in 2023 have announced that they will proceed with their plan to gradually roll back the reductions.
Gas Prices Heat Up as Europe Rushes to Refill Storage
The move higher was driven by a rapid tightening in inventories due to colder weather, lower wind power generation due to low wind speeds and the termination of Russian gas imports via Ukraine.
Asian spot LNG prices have risen in the winter period, but not enough to keep a wide enough premium to Europe’s benchmark prices to incentivize selling U.S. cargoes to Asia, according to shipping data and analysts.
Europe should “meet the Trump administration with an outstretched hand, but not have our hand cut off,” he said Tuesday at the Handelsblatt energy summit in Berlin, responding to the climate and energy directives Trump launched hours after taking office. The European Union should define its own interests, said Habeck, who is the Green Party’s lead candidate for Germany’s upcoming Feb. 23 elections.
The global energy landscape has entered a transformative era as Europe decisively shifts away from Russian natural gas. Once the cornerstone of Europe’s energy supply, Russia now faces the economic and geopolitical fallout of losing its largest market.
With European inventories depleting fast and now sitting below the five-year average for this point during the winter season, Europe will need to boost overseas supply not only for this winter’s consumption, but also in the spring and summer, to fill up storage sites ahead of the 2025/2026 winter.