Eco-Living Magazine

Where Will the World Buy Gas From After Russia?

Posted on the 24 October 2022 by Ecoexperts @TheEcoExperts

Which countries will become the new major gas exporters?

Qatar, the US, Algeria, Norway, Denmark, and Azerbaijan are the main contenders to replace Russian gas hegemony.

Moving away from Russian gas will still be a challenge, even if other gas-rich countries step in to fill the void.

The main problems are logistics, infrastructure, political differences, and the natural increase in the cost of gas as demand goes up.

Here's a breakdown of the major gas exporting countries.

Algeria

Algeria sits on 4.5 trillion cubic metres of proven gas reserves, and has been supplying fuel to Europe for decades.

It's currently the third-largest exporter to the continent, sitting behind Norway and Russia in first and second respectively.

The country supplies much of Spain and Italy's gas via pipelines, as well as LNG (liquefied natural gas) via tanker and truck to other European nations.

Algeria was earmarked as a potential solution to weaning Europe off of Russian gas, but the country's authoritarian government and its continued friendship with Russia make this controversial.

The worry is that Algeria, like Russia, could use its gas as a political weapon - which means it might not be the stable source of gas the world needs right now.

Qatar

Proven gas reserves of 24.7 trillion cubic metres place Qatar in the top three exporters worldwide, which has caused a lot of countries who currently rely on Russian gas to turn to the desert nation.

Qatar has so much gas, that if it were to use it solely for its own purposes, it would take 609 years to burn through it all.

You'd think that'd be more than enough to solve the world's gas problem, but Qatar has made it clear it already has commitments to nations like China, South Korea, and Japan, and isn't sure it can meet the increased demand.

The deputy prime minister of Qatar did meet companies in Germany to discuss new supplies of LNG, though it was made clear this was not a solution for Europe's short-term needs.

Qatar also reportedly wanted to secure a long-term, high-price LNG contract with Germany, possibly for as long as 20 years. This would fly in the face of the EU's plan to transition to more renewable energy sources.

Norway

Prior to Russia's invasion of Ukraine, Norway was already a huge exporter of gas to Europe, supplying 20% of the EU's gas needs.

The UK is a huge buyer of Norwegian gas too, with the Scandinavian country providing more than one-third of all the gas the UK imports.

Norway is well placed to fill the Russian void then, especially considering the country has 1.8 trillion cubic metres of proven gas reserves - roughly 2% of all the gas in the world.

95% of the gas Norway exports goes via a series of pipelines to the continent.

The US

In the wake of Russia's invasion of Ukraine, the US has positioned itself to supply Europe with vast quantities of LNG.

Just one year ago, it was exporting 20% of all its LNG exports to Europe. That figure has rocketed to 60%, and the US is making a lot of money as a result.

Industry experts say the US is raking in around $200 million (£177 million) per shipment of LNG, and some say the figure could be as high as $275 million (£244 million).

Companies within Europe that bought LNG from the US before the big price hike are making big profits as well.

Experts at Vortexa, an energy cargo tracking website, believe some companies are making profits in excess of $150 million (£133 million) on shipments.

Unlike gas from Russia, the money is flowing, and the reality is Europe has little choice but to pay the inflated prices.

Azerbaijan

Azerbaijan, like Algeria, is a gas-rich nation ruled by an authoritarian government, which makes sourcing gas from the country a controversial move for Europe.

That hasn't stopped European Commission President Ursula von der Leyen and Azerbaijan's President Ilham Aliyev signing an agreement to double gas exports to the EU.

The agreement means Azerbaijan will supply Europe with around 20 billion cubic metres of gas every year via the Southern Gas Corridor, a 3,000 kilometre network of gas pipelines.

A hurdle in this agreement is the fact that Lukoil, a Russian gas and oil giant with close ties to Putin, co-owns critical infrastructure needed to extract and transport the gas. It's difficult to predict how the company would act if Putin pressured them to restrict exports.


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