Current Energy Crisis Driven by Various Factors, Inter-Regional Competition for Gas, WEC Says

MOSCOW (Sputnik), Andrei Savenkov - The ongoing energy crisis in Europe is not caused by geopolitics but is instead a product of multiple factors coming together, such as the unexpected return of demand and regions taking the market away from each other, Angela Wilkinson, the secretary-general and CEO of the World Energy Council (WEC), said.

"This isn't a geopolitical crisis, this is a combination of other factors. What's happening in Europe, or in China, or in Oceania, or in Latin America, or in North America, is a combination of a surprise in the return of demand where it's shifted to following the COVID-19 crisis as we come out of lockdown. More energy, more quickly, but different things may be expected in different locations. Asia has gone very big on gas demand. That is taking the market away from Europe", Wilkinson said.

According to the WEC official, gas suppliers around the world have turned to Asia in pursuit of higher prices.

"That's what happens if you rely on the market. 80% of gas contracts are covered by long-term contracts. Those are all being provided, they are all being satisfied, but what didn't happen is Europe didn't invest in a dust buffer during COVID it didn't think it needed one. On top of that, we've had weather. We are experiencing more extreme weather, we are more vulnerable to that, our systems need change", Wilkinson explained.

A sign that reads "Close Today. No Fuel" is seen at a gas station after Hurricane Ida made landfall in Louisiana, in Houma, Louisiana, U.S. September 1, 2021.

© REUTERS / MARCO BELLO

She went on to note that the current situation is unlike the energy crises of the past and is a new phenomenon, which demonstrates the importance of looking forward and learning to balance the issues of energy security, equity, and sustainability.

Gas prices have been surging across the globe due to demand outpacing supply amid an economic recovery after months of COVID-19 restrictions. To complicate matters further, Asia's shift from coal to gas creates additional competition among buyers.

As a result, gas futures in the Dutch TTF hub surged close to $2,000, setting an all-time record for Europe.