The EU's long goodbye to Russian gas: Russia's war in Ukraine initiates necessary 'demand destruction' on LNG supply.

Russia is the world's biggest natural gas (NG) exporter, and the second-biggest crude oil exporter following Saudi Arabia. As the Russia-Ukraine conflict continues to muddle the future for the important energy feedstocks, the European Union (EU) is able to meet its demands elsewhere. Industry experts state that the declining demand occurring with Russia will be irreversible. While NG pricing has somewhat relaxed early in 2023, declining from around $69.60/M BTUs in Aug 2022 to the range of $13/M BTUs to $15/M BTUs now, the commodity remains to be extremely expensive. US NG price stands in the range of $2/M BTUs to $3/M BTUs, Wood Mackenzie reports. As early as 4Q 2021, Europe had been fulfilling about 50% of its energy demands through Russian imports (excluding the United Kingdom, which consumes relatively few Russian NG), and the supply that had been steady for decades stayed constant until end-2021. The EU bought in 2021 nearly 44.8%/y in average of its overall NG from Russia, a figure that fell drastically to 23.6%/y in average in 2022. Moreover, the proportion of NG utilized in Europe plummeted sharply to 13% in 2022 from 29% alone, owing to sanctions and sabotage, as well as to risk-averse substitute sources, according a director at ChemAnalyst. As with NG, the EU is aiming to lessen its reliance on Russia's second main fossil resource, crude oil. From 2021 and 2022, oil fell by 9% to 12%. The petroleum products imports, which stood at around 9.5 M tonnes/mo in average in 2021 and earlier, dropped to 8.6 M tonnes/mo in average until Oct 2022. However, the EU has been extremely resourceful in keeping local reserves despite all of the concern regarding EU natural gas supply being enough to last through the winter a year ago. In Europe, operating NG capacities include Netherlands [78 bn cubic metres (bcm)], Norway (120 bcm), Romania (11 bcm), United Kingdom (46 bcm), Poland (4 bcm), Denmark (6 bcm), and Germany (5 bcm). The EU keeps shifting its reliance from Russia to other countries, including the US, Qatar, and Nigeria. The three nations together represent around 25.7% of entire EU imports of NG now. Algeria, at 11.6%, and Norway, at 25%, round out the highest and latest share of LNG spot imports of the EU. On the other hand, LNG imports from Russia were reduced by 50% in 2021 and by 75% in 2022 in the EU. Russia, meanwhile, is moving its exports to key Asian nations like China and India. India has emerged as a main Russian crude oil destination. India imported nearly 27% of its entire Jan 2023 imports, because of its healthy diplomatic relationship with Russia and cheaper value. A bar graph shows exports of crude oil and condensate, natural gas, coal from Russia to the OECD Europe, Asia and Oceania and rest of the world. Original Source: Rubber and Plastics News, http://www.rubbernews.com/.