High gas prices, energy security fears impede
decarbonisation push
Send a link to a friend
[May 27, 2022] By
Florence Tan and Joyce Lee
DAEGU, South Korea (Reuters) -Energy
security has become a top priority for importers as forecasts of tighter
gas supplies and volatile prices in the next few years are keeping
buyers on edge and impeding the push towards decarbonisation, energy
executives said.
Europe is importing record volumes of liquefied natural gas (LNG) as gas
from its top supplier Russia has been disrupted following the Ukraine
crisis. That drove prices in Europe and Asia to all-time highs earlier
this year, fanning inflationary pressure and retarding efforts by
countries to switch to gas from coal to reduce pollution and carbon
emissions.
"Geopolitical conflicts have made gas markets unstable," Yalan Li,
chairperson of the board of directors at Beijing Gas Group said at the
World Gas Conference.
She added that gas prices are unbearably high for users, creating a
greater likelihood of coal’s return. Tight natural gas supplies
especially during winter have also weakened the confidence of
governments and users in transitioning to gas, Li said.
China, the world’s top LNG importer last year, relies on imports to meet
nearly half its gas needs. But its imports are forecast to shrink this
year as the world's top energy consumer turns to cheaper coal.
![](http://archives.lincolndailynews.com/2022/May/27/images/ads/current/humanesociety_sda022411.png)
Similarly, India, another key growth market for LNG, is also using more
coal and slowing down spot LNG purchases due to high prices.
A.K. Singh, managing director of India’s key LNG importer Petronet LNG,
said prices for supplies from long-term contracts have doubled for May
from a year ago while spot prices have tripled.
"There is some demand destruction, particularly in India, because of the
very high prices," he said, adding that some consumers are switching to
cheaper fuels which is not good for the gas sector.
[to top of second column] |
![](../images/052722PIX/busine51.jpg)
Smoke billows from a chimney at a combined-cycle gas turbine power
plant in Drogenbos, Belgium April 27, 2021. REUTERS/Yves Herman/File
Photo
![](http://archives.lincolndailynews.com/2022/May/27/images/ads/current/debbiesfloral_lda_MAY_2021.png)
Executives at the conference called for more financing and investments in the
oil and gas sector to boost supplies and stabilise prices to maintain the
momentum on the coal-to-gas switch of recent years.
Stabilising gas prices is the industry’s top priority as prices and volatility
are unacceptably high for buyers, state-run Korea Gas Corp's (KOGAS) Chief
Executive Officer Chae Hee-bong said.
"If the current situation persists for a long time, some experts say it will
lead to demand destruction, especially in emerging countries," he said, adding
that prices need to stabilise to ensure demand will grow in the long run.
SK E&S Vice Chairman Yu Jeong-joon called on international financial
institutions to provide more support for developing countries' shift to gas.
In Japan, LNG supplies from Russia’s Sakhalin-2 are still flowing despite
disruption concerns but Tokyo has stepped up efforts to diversify and invest in
supplies elsewhere.
LNG purchases are "going from just in time to just in case", said Yukio Kani,
managing executive officer at Japan’s top importer JERA, underscoring the need
to secure supplies.
"The world has been trying to move toward decarbonisation, and we really tried
to secure sustainable energy but we face a serious challenge in achieving it,”
he said.
High prices have sidelined potential LNG buyers in developing countries, Kani
said. JERA is investing in gas-fired power projects in Bangladesh and the
Philippines.
(Reporting by Florence Tan and Joyce Lee; Editing by Sonali Desai)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |