Due to low demand for LNG from China and the mild winter last year, there was more than enough supply which kept the price low. “That will change,” says De Zoete. As Europe invests heavily in wind energy and hydrogen in the long term, Europe is unable to conclude long-term LNG contracts, he continues.
‘LNG is a bridge product: by 2040 we are predicted to be at half of our current natural gas consumption.’ The fact that Europe does not see LNG as a long-term investment complicates its position. “We will pay a little more for each LNG ship we want to buy for Europe.”
Buy more
Now that China’s economy is recovering, Europe has a formidable competitor, thinks De Zoete. ‘We have to hope China doesn’t buy too much with its improving economy. Then the jump will be over and the price of gas will rise rapidly again.
To limit competition with China, Europe needs to buy more LNG quickly, says De Zoete. ‘There is only one way we can prepare: by buying more than we need. Prices are still pretty low at the moment, so let’s fill up the underground storage so we can only compete for a small part of 2023.”
Pull yourself up together
Europe must also act together in purchasing LNG, says De Zoete. ‘So they can buy the right volumes intelligently and at the right time.’
He sees that Europe didn’t have enough time for that in 2022. Therefore, he doesn’t see huge price increases like we saw in 2022 repeating themselves. “Now they’ve been thinking about it for months.”