Europe has taken a course to abandon Russian energy carriers and seeks to stock up on sufficient amounts of natural gas and coal. However, the region’s ability to keep warm this winter will largely depend on three countries on the other side of the world: Japan, South Korea and China.
Share of world LNG imports: Asia (in white), Europe (in blue) and other consumers (in orange). Source: Bloomberg
Europe has taken a course to abandon Russian energy carriers and seeks to stock up on sufficient amounts of natural gas and coal. However, the region’s ability to keep warm this winter will largely depend on three countries on the other side of the world: Japan, South Korea and China.
Asian countries, which are among the world’s largest importers of liquefied natural gas and coal, have the same heating demand peak season in winter as Europe. It is still too early for meteorologists to make accurate forecasts of winter weather conditions, but any hint of the prospect of a sharp drop in temperatures in the above three countries could provoke a fiercer struggle for energy supplies.
International competition for fuel has intensified after the escalation of the conflict between Russia in Ukraine upended global trade flows and led to record increases in coal and natural gas prices. In Europe, the pressure is about to escalate, with the European Commission imposing a total ban on Russian coal from next week, and Gazprom drastically reducing pipeline gas supplies to Europe. Russia has historically been the largest supplier of gas to the European Union, covering about 40% of demand.