by Manuela Schwesig (3rd R), prime minister of the German state of Mecklenburg-Western Pomerania, and … [+]
Neither the US government nor its drillers are to blame for the high prices Europe is paying to import US natural gas, an industry expert said this week.
Anna Mikulska, who studies gas geopolitics, said the price comes from the seller’s response to the market.
“The U.S. is a big supplier of European natural gas, but it’s not the U.S. producer,” said Mikulska, a fellow at the Baker Institute’s Center for Energy Studies. “It’s the companies that buy the gas from U.S. producers, and it usually goes where the price is higher.”
German Economy Minister Robert Habeck on Tuesday accused the US and other nations of charging excessive prices for natural gas. The largest U.S. LNG exporter, Houston-based Cheniere Energy Partners, did not respond to a request for comment.
Full European storage
Europe appears to be meeting its goal of storing sufficient natural gas reserves for the coming winter, Mikulska said, an outlook shared by Goldman Sachs and the International Energy Agency.
“Right now storage is at a very high level, sometimes 100 percent, most of the time over 80 percent,” Mikulska said Wednesday during the Baker Institute’s winter market briefing. “Europe really wanted to have its warehouse full this time. They learned a lesson last winter that it’s not good (to have it less than full) especially if supply is not provided or uncertain.”
Europe has boosted its storage not only by importing more natural gas from alternative sources, but by limiting industrial use of natural gas, which is causing some companies to move production outside Europe.
“This was at zero cost,” he said. “It was at the cost of reducing demand in the industry. And that is the big story of this winter and the coming year. It’s not just about not being able to heat homes, which you’re obviously going to prevent, but it’s about Europe’s ability to recover in the future from the industrial recession caused by the reduction in the supply of natural gas to industry.”
A cold winter could break European unity, he added, because each EU country has its own energy policy and they may compete or clash.
“If it gets very cold we will see, probably, it will be a test of European solidarity and the ability of Europe to manage its demand as a whole.”
The summer may not bring much relief next year, he added, if Europe needs to replenish its stockpile without Russian gas. “That can be challenging,” he said.
U.S. natural gas production was on a steady incline in 2022 to meet domestic and overseas demand … [+]
