China will become the main threat to Europe's energy security in 2023 due to the uncertainty of rising energy demand. The increase in consumption from Beijing may affect the supply of liquefied natural gas (LNG) to Europe, which, in turn, could lead to a new energy crisis. This is reported by Bloomberg with reference to the report of the International Energy Agency (IEA).
The IEA predicts that in 2023 LNG demand in China could grow by 35%, leading to a new price crisis in Europe this summer. A similar alignment is possible with a fairly rapid recovery of the Chinese economy amid the lifting of all coronavirus restrictions. Rising demand from China will intensify competition for fuel; even a decline in European countries' demand for LNG will not be able to cover the potential difference between demand and supply in the event of an increase in demand in China, the IEA notes.
Bloomberg notes that the risks of a successful passage of the 2023 heating season in Europe are still high, since the EU last season took place in conditions when Russian fuel was still supplied to the continent. Moreover, emergency measures to reduce gas consumption played in Europe's favor, as well as a warm winter, which helped stabilize the situation in the energy market – by the end of winter, gas prices fell from their summer-autumn peaks by 80%. In 2023, Europe will have to fully rely on its own forces and LNG imports, and this may not be enough to successfully pass the heating season.
The IEA predicts several scenarios for the growth of gas consumption in China, the difference between which is approximately 40 billion cubic meters. If China exceeds 2021 consumption, i.e., the most severe scenario for consumption growth is realized, Europe will probably have to look for sources in order to replace 8% of its consumption in 2023, even with the already announced cuts.
“This range (under the worst case scenario) exceeds the uncertainty associated with the potential loss of all remaining pipeline gas flows to Europe from Russia,” the IEA said in a report.
At the moment, the IEA does not consider the worst-case scenario as a baseline, but urges the EU not to relax and prepare for the upcoming heating season in all seriousness. The agency's baseline forecast for gas consumption growth in China is 7%, and Europe will reduce consumption even by 2022 standards. The IEA recommends that the EU not rush to lift restrictions on consumption and look for alternative gas suppliers.
Because of the war between Russia and Ukraine, the European Union is facing the worst energy crisis in the modern history of the continent. Moscow has used gas supplies to blackmail the European Union into reducing support for Ukraine. For several months, Russia, under the pretext of imposed sanctions, reduced gas imports to Europe, while Brussels insisted that Russia was not complying with contractual agreements. The controversy ended in the fall, when the Nord Stream and Nord Stream 2 gas pipelines were destroyed as a result of sabotage. The perpetrators of the sabotage have not yet been found – Moscow, Brussels and Washington blame each other.
