Europe considers the first phase of the energy crisis to be over but fears the winter of 2023 | Economy

Even before the official start of winter, when heating multiplies the use of natural gas in Europe, the EU turns the page in the saga of the energy crisis: for a few days now, the concern of the main operators has ceased to be this winter to focus on the next one. Except for a radical change in the weather, which would give way to severe waves of persistent cold throughout the Old Continent —something that, to this day, no meteorological model foresees—, the world of energy already thinks 10 months from now: those left before the radiators come back on again.

The concern of a few months ago today turns into calm about the short term. The extra effort to fill the gas tanks during the spring and summer, a much warmer autumn than usual, and the cut in household and business consumption in an environment of high prices and repeated calls for savings have paid off: Underground warehouses today exceed 85% of their capacity, more than 10 points above the average for the last five years and almost 30 more than a year ago.

The good state of the reserves, together with the growing capacity of gas reception by ship —The Netherlands and Germany have inaugurated regasification plants in record time and in the entire block there are thirty projects underway between now and 2026, according to the latest compilation from Global Energy Monitor—, allows us to see things in another way: the verb to save continues to be conjugated into an imperative, yes, but the waters go down much calmer. “Although we must be conservative regarding the level of reserves, the scenario seems more favourable: with normal winter temperatures, the current level of demand and a supply of liquefied natural gas in which there are no surprises [negativas] It is foreseeable that we will reach March-April with the current levels of reserves”, he points out. Pedro Cantuelfrom Ignis Energy.

For the coming winter, however, the panorama changes. “The current cushion should not lead to overly optimistic predictions about the future: market fundamentals could tighten again next year″, warned this week the technicians of the International Energy Agency (IEA, the arm of the OECD for questions energy companies) in the presentation of his latest still photo of the situation in the Old Continent. The general tone that emanates from his study is clear: although in spring and summer any seasoned observer would have expected to reach mid-December as we are today, the long-term game is not yet won.

“You have to start thinking from now on 2023 and beyond. The next cold season will be very different from this one, because we won’t be able to count on Russian gas,” James Watson, general secretary of the Eurogas employers’ association, which brings together the big names in the sector: from Uniper to Equinor passing through by ENI, Engie, TotalEnergies or the Spanish Naturgy. “We will have to be even more careful in managing demand; deepen the diversification of suppliers, with long-term contracts and reliable suppliers, such as the United States, Canada or Norway; and speed up with biogas: the sooner the better”, he claims.

The reasons for this challenge in the medium term are multiple. In filling the tanks in record time, the help of the Russian gas that arrived by tube was essential; and, as Watson says, things have to change a lot so that this gas is not history. Today, after the closure of the Nord Stream 1 and Yamal gas pipelines, and except for the small fraction that continues to arrive through Ukraine and the Turkstream, in the EU there is a total drought of Russian gas through tubes. In addition, after the relaxation of restrictions in China, the Asian giant has all the signs of making a strong return to the world market for liquefied natural gas (LNG), which Europe had easily dominated in recent months. And more competition in a market of limited size means more boats in contention and higher prices.

Almost 30 billion cubic meters (bcm) of natural gas out of a total consumption of 400; or a fifth of what Europe bought from Russia before the war. That is the size of the gap foreseen by the IEA in the European market for the coming winter. Also the main argument for trying to accelerate savings from now on: all the gas that is not consumed today will be gas that can be spent next winter, when fears and supply shortages occur again.

“We have one year to electrify, put in as much renewable energy as possible, fill the tanks and start up more floating regasification plants,” outlines Pedro Fresco, an independent expert after several years leading the energy policy of the Valencian Community. “This winter there could only be problems if it is very hard, and it doesn’t seem like it. But we will have to refill the reserves for later.

“If this winter ends with deposits below 40%, next winter will be extremely difficult,” predicts Katja Yafimava of the Oxford Institute for Energy Studies. “To be able to overcome it safely, Europe needs it not to be very cold in the coming months, that there are no more supply problems [en referencia al GNL, el combustible que llega por barco desde medio mundo] and a 15% reduction in demand”, he lists. So far in 2022, total gas consumption (homes, industry and electricity generation) has fallen by 11%, according to data from the Bruegel European Studies Center. Over the months, however, this downward trend has accelerated: in November, the decline was 23%.

Far more optimistic is Norbert Rücker, head of economic analysis at Swiss investment bank Julius Baer. “Europe is in a position to avoid power shortages this winter and beyond,” he wrote in a note to clients in which he practically rang bells. “With Asia’s turn to coal and nuclear, the global drive to renewables and China’s economic stagnation, the world market should be enough to supply the continent.” As in all analyzes, however, there is a note in the form of an omen about prices: “Nervousness will prevail, and prices will continue to oscillate to the sound of the cold and any news that increases the risks.”