Europe can ride out gas crunch this winter and next, Engie says

Europe is likely to pull through this winter and the next as it makes up for dwindling Russian natural gas flows with supplies from elsewhere and also reduces demand, according to the head of France’s main distributor of the fuel.     

“For this winter, the feeling is that we’ll manage” as inventories are still almost full in western Europe, Engie SA Chairman Jean-Pierre Clamadieu said at a conference in Paris Tuesday. “Our experts at Engie have the feeling that we should manage to go through next winter without too many difficulties” as well. 

That will partly depend on the weather, Europe’s ability to keep luring liquefied natural gas cargoes, and energy conservation, Clamadieu said. LNG deliveries into Europe are likely to remain high in the coming weeks, he added. But temperatures are plummeting across the region, likely draining stockpiles and testing consumers’ ability to limit consumption.  

Clamadieu’s somewhat optimistic comments contrast with concerns expressed by the International Energy Agency last month. Some suppliers have also said next winter will be more challenging because the sharp decline in Russian supply will make it tougher to replenish storage sites. At the same time, LNG demand in China could rebound if its economy recovers after Covid-related lockdowns.

Europe will balance its gas market again when it’s able to sign new mid- and long-term contacts with suppliers, with US and Qatar starting export facilities from the middle of this decade, the Engie Chairman said. Meanwhile, the continent will face expensive costs for the fuel as the European Union struggles to agree on price caps or implement efficient joint purchases of LNG, he said.

© 2022 Bloomberg L.P.

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