The United States and Russia are strangling gas supplies to Europe and the closure of the Maghreb Gas Pipeline could give the finishing touch to security of supply in Spain this winter.
According to data from the Strategic Reserves Corporation, until last July, the arrival of liquefied natural gas from US plants had decreased by 47.7%, from 41,480 GWh in 2020 to 21,701 GWh that have arrived this year. anus.
This sharp reduction has meant that the United States has gone from representing 14% of supply to just 9%, almost a third less, and that Algeria has once again reached around 56% of market share.
The strong pull in demand from China – which is about to overtake Japan as the main consumer of LNG – has raised prices and caused the diversion of a large number of LNG tankers to Asia, as happened last winter.
The situation is expected to worsen in the coming months due to the low levels of reserves in Europe and the United States (both below the average of the last five years) with the arrival of winter.
The heat wave that hit the US and Canada this summer caused a greater use of conventional generation and made it difficult to replenish their gas reserves.
This situation, together with the decrease in Russian flows to Europe to refill their own warehouses and the maintenance of Norway, has caused a supply crisis to which has been added the imminent closure of the Dutch Groningen field.
Europe will have problems to compensate its supply with the increase in the US supply, since Asia has a greater number of signed contracts, as demanded by the producing countries and the Old Continent is playing it to the letter of a slight relief for a increased flow from Norway, to the start-up of Nord Stream 2 and to the hope of a mild winter.
The strong Chinese demand is also causing LNG carriers to opt for longer routes due to the increase in the number of ships bound for Asia and the Panama Canal rates, another extreme that can generate additional tension.
On October 12, Entsog – the gas supervisory body – is expected to release its report on the situation in Europe to face the winter. At the moment, the sector is expected to issue a warning for the low level of storage.
The agency insisted in April that the levels were inadequate and set a target of 90% for October 31, but at the moment they are at 71%.
The Spanish government, fearful of a clear risk of gas shortages if a new storm similar to Filomena occurs, has forced marketers to increase their supply levels by 70%.
In order to achieve these objectives, Enagás was already forced to set up an auction of slots for ships that could facilitate the entry of LNG carriers and in the next few days it could have to make a new call.
The decision of the technical manager of the system also coincides with the opening by the Strategic Reserves Corporation of the term for the extension of the strategic reserves for the regulated entities in the first quarter of 2022 and with the vice president, Teresa Ribera, asking the European Commission considering creating a gas purchasing center and the Foreign Minister trying to alleviate the diplomatic crisis between Algeria and Morocco.
As of November 1, the 13.5 bcm that can enter Spain through the Maghreb Gas Pipeline will no longer be received. Algeria gave guarantees last week that the close to 6 bcm that were entering now can continue to be received either through the expansion of Medgaz (2 bcm) or from LNG tankers.
Mibgas continues to break price records in recent weeks
Morocco received through this gas pipeline around 1 bcm from Algeria, but now it will also have to solve its supply and that is why it asks to convert the Maghreb pipe into reversible.
Algeria, in any case, risks losing market share, which can have a significant impact on its accounts.
Between 2016 and 2020, the GME gas pipeline supplied Spain with a total of 34.8 bcm, which at 2018 prices would amount to around 11.2 billion euros and which would not be offset by the expansion of Medgaz from 8 bcm to 10 bcm.
After the Foreign trip together with Naturgy and Enagás, the parties insisted that the Algerian supply is guaranteed, but the market remains doubtful and the Mibgas continues 9to break price records in recent weeks.