Qatar Energy Minister: Gas supply is extremely unstable, Russian gas will eventually return to Europe

Jan 29, 2023

Saad Al Kaabi, Qatar's energy minister and head of QatarEnergy, the state-run oil company, said the global gas market will remain volatile for the next few years as rising demand leads to supply shortages.


Natural gas prices fell in the European region due to warmer weather. But it may be difficult for Europe to stockpile the gas stocks it needs in advance for next winter because of the difficulty in obtaining Russian gas.


Russia will eventually return to Europe


Al Kaabi warned that the future of natural gas supply will be extremely unstable. Although Qatar has supplied a large amount of natural gas to the market, it is not enough. He does not expect additional natural gas supplies to emerge on the global market until 2027.


The question to ponder is how this year Europe will fare as it restocks for winter, having struggled to get pipeline gas from Russia, the main source of European restocking.


Al Kaabi further pointed out that despite European efforts to diversify energy supplies, European countries will eventually return to buying Russian gas due to lack of alternative sources.


He explained that Russia and the EU would somehow resolve the geopolitical conflict, and then Russian energy would return to the European market. While Europe is diversifying its energy supply and stopping 100% dependence on Russia, in fact Russian gas is coming back to the European market.


He believes that this is a good thing for the European natural gas industry and the entire European market, and the reinflow of Russian natural gas will also help stabilize local energy prices.


LNG trading volumes hit record highs


Global consumers will cumulatively import 409 million tonnes of LNG in 2022, up 7.7% from 379.6 million tonnes in the previous year and a record, according to Refinitiv data.


The European Union has contributed a significant portion of this record demand for LNG. Purchases in the EU accounted for 25% of global LNG traded volumes in 2022, with imports reaching 101 million tonnes, an increase of almost 58% year-on-year.


On the other hand, the EU has also emerged as a premium market for LNG as it rushes to wean itself off its dependence on Russian gas, with benchmark gas prices soaring, outdoing Asian buyers in global LNG trades and sweeping up LNG commodities. 


Of course, the demand for natural gas in Asia has been reduced due to the epidemic, and some South Asian countries cannot afford the high price of liquefied natural gas products and withdraw from the competition. Various factors will lead to large-scale purchases by European buyers in the liquefied natural gas market in 2022.


But analysts pointed out that as China fully restarts its economy in the new year, the demand for natural gas may surge, thereby raising the level of global demand, which will cause the price of natural gas, including liquefied natural gas, to surge again.


It would also complicate the EU's efforts to stockpile gas in advance for next winter.