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EU gas demand expected to fall by more than Russian imports in 2023

Brussels has stated it expects EU gasoline demand to fall by greater than its whole imports from Russia this yr.

Gasoline-saving measures undertaken by the EU’s 27 member states are estimated to chop consumption in 2023 by 60 bcm (billion cubic metres) in comparison with the bloc’s common use over the previous 5 years, in response to an inner European Fee doc seen by the Monetary Instances.

This represents “greater than the gasoline volumes we nonetheless foresee to import from Russia in 2023, each pipeline and [liquefied natural gas]”, the doc stated. It is usually 8 bcm greater than the bloc managed to save lots of on the top of its vitality disaster final yr.

Kadri Simson, the EU’s vitality commissioner, informed a gathering of commissioners on Wednesday that the autumn in demand was not “good luck” however the results of a collection of emergency legal guidelines handed in 2022 within the wake of Russia’s full-scale invasion of Ukraine, in response to talking notes seen by the FT.

Among the many legal guidelines was an settlement that EU international locations would voluntarily cut back gasoline consumption by 15 per cent, a goal that had been surpassed, in response to the fee.

One EU official engaged on vitality coverage stated that “the figures on the discount are fairly putting”, including that this meant that “Russia has misplaced its gasoline leverage on Europe”.

Analysts identified, nevertheless, that the EU skilled a light winter in 2022 and that top costs had resulted in energy-intensive business scaling again manufacturing.

If the bloc does meet the fee’s expectations of lowering demand by 60 bcm, there could possibly be a provide glut and a “massive, massive value drop”, Henning Gloystein, director of vitality, local weather and sources at Eurasia Group, warned.

In March EU international locations agreed to increase the 15 per cent demand discount goal for one more yr although vitality saving efforts haven’t been felt evenly throughout the bloc.

A report printed on Wednesday by the European Environmental Bureau discovered that solely 14 of the 27 EU international locations had launched obligatory measures to chop vitality consumption and 5 of those — Germany, France, Italy, Spain and Portugal — made up 60 per cent of the autumn in demand.

“Probably the most strong measures on gasoline financial savings have been carried out in international locations that import massive portions of Russian gasoline corresponding to Italy and Germany,” the report stated.

Bulgaria, Latvia and Romania had been the one member states to not have carried out any vitality saving legal guidelines, which might partially be because of already low gasoline demand in these international locations, the report famous.

Russian imports beforehand made up round two-fifths of the bloc’s gasoline however have been steadily reduce by Moscow within the run-up to and after final yr’s invasion of Ukraine, in an try to lift costs and squeeze the EU’s vitality provides. Preliminary knowledge from the fee exhibits that in March EU imports of Russian gasoline had been 74 per cent decrease than they had been in March 2021, the doc stated.

General annual gasoline provides from Russia fell from 150.2 bcm in 2021 to 74.4 bcm in 2022, whereas imports in 2023 have up to now amounted to 10.8 bcm, in response to the fee’s figures.

Simson stated that the bloc’s gasoline reductions had resulted within the EU’s whole month-to-month funds to Russia falling from €21.4bn in March 2022 to €2.7bn in March 2023.

However efforts to fully finish gasoline flows from Russia on routes the place Moscow has already reduce provides foundered on the G7 summit this month after they had been blocked by EU delegates.

Questions additionally stay over whether or not the EU can safe any further gasoline provides this yr as most obtainable LNG has already been contracted. “There may be solely a lot provide and numerous it’s already dedicated,” stated one diplomat from a non-EU nation. “It appears to be the case that the EU is asking for greater than is feasibly potential.”