Scarcity Of Gas A Greater Worry Due To Russia's Export Dominance

Energy industry leaders said the burgeoning energy crisis is perhaps more dire in natural gas markets than in crude oil, due to Europe's dependency on Russia and as prices have been sky-high for months.

Panelists at this year's CERAWeek conference in Houston have stressed a greater need for secure energy supply. While world crude markets have been roiled by the U.S. decision to stop importing Russian oil, Asian and European gas markets have been in turmoil since last year as Russia slowed pipeline flows.

"Clearly what is happening in Europe is the problem of scarcity of gas. It's not oil," Gabriel Obiang Lima, Equatorial Guinea's minister of hydrocarbons said at the conference.

Russia is the world's largest exporter of natural gas, shipping out roughly 23 billion cubic feet of gas every day (bcfd), of which about 90% goes to Europe or Eurasia, with about half of that going to Germany, Italy, France and Belarus.

U.S. President Joseph Biden announced an immediate ban on Russian oil imports on Tuesday in the wake of its invasion of Ukraine. But natural gas may be the more crucial export, as Russia has more proven natural gas reserves than any other nation.

The United States led an effort early in the year to secure more supply via liquefied natural gas (LNG) cargoes for Europe earlier, U.S. State Department Senior Advisor Amos Hochstein told the audience in Houston on Tuesday.

He said that energy "is the card (Russian President Vladimir) Putin thinks he has to intimidate his neighbors."

The United States is the world's top gas producer, however, currently exports just about all it can in LNG - about 12.6 bcfd, which it sends to destinations across Europe and Asia.

Terminals for liquefaction and re-gasification of the fuel supercooled into a liquid for transportation by tanker take years to build, and after several years of development of new plants, the last three years has seen very few new projects started.

"There's just no additional LNG that's coming online to bridge the gap for the gas that's going to be needed by Europe next year - and it was cold in Asia, and Asia has no other alternative," said Michael Smith, founder and chief executive of Freeport LNG.

A source familiar with the White House's thinking said the Biden administration is mulling how much to cooperate with the U.S. natural gas industry, wary that any outreach would be seen by environmentalists as a capitulation on efforts to reduce reliance on fossil fuels.

While the European Union has not elected to stop buying Russian gas - Russia is still sending gas to Europe via the original Nord Stream 1 pipeline - Britain on Tuesday said it will phase out purchases of Russian oil and gas by the end of the year.

Britain accounted for about 4% of Russian gas exports in 2021, according to U.S. Energy Department figures.