BAKU, Azerbaijan, Jan.13. Europe enters 2023 with less uncertainty than the market experienced through most of 2022, Trend reports with reference to Wood Mackenzie.
“Russian imports now represent only 7 percent of the total Europe gas supply, vs 27 percent in 2021, with limited downside risk beyond disruption of flows through Ukraine transit. There are also fewer concerns about supply shortages this winter as European storage levels stand at a record 83 percent. Reduced gas demand in response to high gas prices and sustained LNG imports should help Europe get through winter with gas storage at around 40 percent of capacity at the end of March 2023, a much higher level than the 27 percent it reached in 2022,” reads the WoodMac report.
The report reveals that Russian imports in the summer of 2023 (April to October) will be up to 25 bcm less compared to the same period of 2022 “once we account for the risk of further curtailments via Ukraine”.
“However, lower storage injection requirements (-19 bcm) and increased LNG imports (+9 bcm) will help hit the EU’s 90 percent gas storage capacity target. We anticipate prices to be much lower in 2023, compared to last year, albeit they will still need to be high enough to incentivize LNG imports and discourage domestic demand. There are risks to this view. Weather is the most considerable one – a cold winter in Europe and Asia could drive storage levels down to 19% by the end of March and risk Europe storage reaching only 73 percent by November 2023. Stronger than anticipated rebound in China LNG demand is another risk. At the same time, non-Russian gas infrastructure disruptions remain a wildcard. Europe might be in a better position compared to what was initially feared, but it is not out of the woods yet,” said the consulting company.