Global Gas Markets on Edge as Europe Braces for Winter

Anne-Sophie Corbeau (0:04)

There is still a lot of demand in the residential sector, so people are not going to stop heating.

There are still a lot of issues because gas is basically the fuel of last resort in the power generation sector. And on top of that, we no longer have Russian pipeline gas.

Ira Joseph (0:19)

There's a huge potential swing here in terms of what could potentially be drawn from storage this winter. But going above 74 BCM, which was the record established in 2018 on your way to 80 BCM, is a really kind of slim margin for area here. If it does get cold in Europe, and heaven forbid, it also gets cold in Asia at the same time.

Tatiana Mitrova (0:40)

I think the most important thing to keep in mind is, how do we make decisions in this situation of extreme uncertainty and unpredictability?

Jason Bordoff (0:52)

Global gas markets, especially in Europe, are approaching winter under serious pressure. With storage inventories lagging behind historical averages, and shipping disruptions from the Middle East threatening key liquefied natural gas flows, many nations are finding themselves deeply exposed. The supply shocks from both the Russian-Ukraine war and now the Strait of Hormuz closure have revealed vulnerabilities in a market that is more interconnected than ever, but also more geopolitically complex. With less supply flexibility and growing sensitivity to weather, the case for new security frameworks is getting stronger, built on closer international cooperation, new reserve mechanisms and greater market flexibility.

So where does the global gas market stand right now? How much LNG is actually moving through the Strait of Hormuz? What are European countries doing to prepare for the winter? Is Russian gas coming back to the table? Will the renewed concerns about energy security spur a faster transition away from gas and toward clean energy?

And how do China and the rest of Asia factor into this high-stakes calculus for global supplies?

This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I'm Jason Bordoff.

Today on the show, we have our own phenomenal scholars, Anne-Sophie Corbeau, Ira Joseph and Tatiana Mitrova. And so, Ira and Tatiana are all research scholars here at the Center on Global Energy Policy. They're based in Paris, New York and Cyprus respectively. They all have deep expertise in geopolitics and in energy markets. They joined me to discuss the global gas market, what's behind the looming European supply crisis this winter, and how the markets and European leaders are responding. We played out some scenarios regarding supply and demand going forward and the role that Asian markets, global geopolitics, coal, renewables and electrification could all play. I hope you enjoy the conversation. Anne-Sophie Corbeau, Tatiana Mitrova, Ira Joseph, my phenomenal colleagues, all of you, thanks so much for joining us. This is quite the group to talk about where we are, particularly in global gas markets and energy security. I'm excited for this conversation. Thanks for being here.

Ira Joseph (3:20)

Thanks for having us.

Anne-Sophie Corbeau (3:20)

Thank you.

Tatiana Mitrova (3:21)

Thank you.

Jason Bordoff (3:22)

So there's a lot of conversation about oil prices, oil markets, diesel prices. Bob McNally and I have a piece out this morning about why banning diesel exports is not a good idea.

Not always as much conversation depending on where you're sitting in what's happening globally in natural gas markets. But incredibly important, including for energy security. And you see in Europe, for example, inventories at a lower level than historically would suggest they should be as they head into the winter. So I just want to, we wanted to take this opportunity on this podcast to help people understand what is happening because of today's energy crisis, Hormuz, energy transition policies and more that is affecting both supply and demand for the global gas market. So let me start with you, Anne-Sophie. I know you were in Bangkok for GasTech, this major gas conference and you just wrote a piece with the title, Short-term Gain, Long-term Pain. Maybe you could start and tell everyone what you heard when you were out in Asia and what you're seeing right now and what you meant by that title.

Anne-Sophie Corbeau (4:27)

Well, what I meant by that title was that, I mean, I think on the producing side, everybody is very excited and of course, many companies are making a lot of money. Not the people who are, of course, having LNG exports coming from the Gulf, but otherwise, I think it's pretty good, given where prices are. I think we are looking at the mid 70 euro per megawatt hour in Europe and 25, 26 dollars per mmBtU in Asia. So this is pretty high.