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LNG crisis.

The Executive Director, Fatih Birol, of the International Energy Agency (IEA), said on Tuesday that tightening markets for liquefied natural gas (LNG) worldwide and significant oil producers cutting supply have put the world in the middle of "the first truly global energy crisis". 


At the same time, the recent decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to cut 2 million barrels per day of output is a «risky» decision as the IEA sees global oil demand growth of close to 2 million BPD this year, Birol said. Moreover, soaring global prices across several energy sources, including oil, natural gas and coal, are hammering consumers while they are already dealing with rising food and services inflation. Nevertheless, Birol said that if the weather remains mild, Europe might make it through this winter, though somewhat battered. In addition, G7 nations have proposed a mechanism allowing emerging countries to buy Russian oil but at lower prices to cap Moscow's revenues in the wake of the Ukraine war.

Birol said the scheme still has many details to iron out and will require the buy-in of major oil-importing nations. Treasury official told Reuters last week that it is not unreasonable to believe that up to 80% to 90% of Russian oil will continue to flow outside the price cap mechanism if Moscow seeks to flout it. «I think this is good because the world still needs Russian oil to flow into the market for now. An 80%-90% is a good and encouraging level to meet the demand,» Birol said.

Birol said the energy crisis could be a turning point for accelerating clean sources and forming a sustainable and secure energy system. «Energy security is the number one driver,» said Birol, as countries see energy technologies and renewables as a solution. The IEA has revised the forecast of renewable power capacity growth in 2022 to a 20% year-on-year increase from 8%, with nearly 400 gigawatts of renewable capacity added this year. In addition, Birol said that many countries in Europe and elsewhere are accelerating the installation of renewable power by cutting the permitting and licensing processes to replace Russian gas.

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  1. Liam28 October 2022 at 15:59

    Unless they find ways to stop funds from reaching Moscow this war will last for years to come.

    ReplyDelete
  2. Zoe2 November 2022 at 19:52

    This winter will not be mild. I think December and especially January are going to be very hard for many countries in Europe, especially Germany. How could such a developed country such as Germany rely so heavily on Russian oil is beyond me.

    ReplyDelete

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