A global energy crunch sent natural gas prices soaring and hitting record highs in the past month. What are the factors that are fueling the price surge? What is the future of gas and LNG in ensuring energy security and how does it change in light of the energy transition?
These were the main questions raised on the 3. LNG Summit, the CEE region’s leading gas conference, where major stakeholders of the gas and LNG industry discussed the future of the sector.
The Budapest LNG Summit was opened by Hungary’s Minister of Foreign Affairs and Trade, Péter Szijjártó, who underlined that Hungary has always supported plans to strengthen Europe’s energy security, such as the construction of an LNG terminal in Croatia and the establishment of interconnectors with neighbouring countries. At the same time, he emphasised that it was well known that Hungary’s long-term gas purchase agreement with Russia expires this year, nevertheless, there have been no infrastructure developments, no new resources and no investment decisions.
The Minister underlined that the diversification of energy sources remains high on the agenda, however, the government’s policy will continue to be determined by guaranteeing Hungary’s security of supply.
Yury Sentyurin, Secretary-General of the Gas Exporting Countries Forum (GECF), whose members together control over 50 per cent of the pipeline and LNG exports across the globe pointed out that spot gas and LNG prices experienced a violent price cycle from unprecedented lows in 2020, to sky-high prices in this year driven by tight supply and strong demand, particularly in Europe. He added that prices could remain bullish over the winter season if the winter is colder-than-normal.
Torben Brabo, President of Gas Infrastructure Europe (GIE) presented the future role of the gas infrastructure as a new innovative energy system’s backbone, allowing EU citizens and industries to benefit from a secure, cost-effective and sustainable energy supply.
„We can make the energy transition faster and cheaper by using the skills and competencies of the existing gas infrastructure operators,” said Mr Brabo.
Gergely Szabó, Regional Chairman of MET Central Europe underlined that LNG, by its very nature, LNG brings togetherness to the energy business. This is why it is the future of natural gas and a very important part of the future of the energy mix.
„At MET Group, we believe in connecting markets, learning new contexts in new markets and implementing them elsewhere,” pointed out Mr Szabó.
LNG can provide a viable alternative to the greening of the transportation sector as well. The long haul and heavy-duty road transport pose a particular challenge in terms of energy demand, as they require a high density of energy in the fuel they use. „We see Bio LNG as a key part of our wider work to provide a range of energy choices for our customers,” said Christian Hoellinger, LNG Road Europe Manager of Shell.
The perception of energy security in Central and Eastern Europe has changed significantly as the regional market opened up to global LNG trade. Recent investments in the CEE region are real game changers both on a national and a regional level. The Krk LNG terminal in Croatia, which just started commercial operations this January had a very successful first year delivering more than 1.1 bcm of natural gas, said Hrvoje Krhen, Managing Director of LNG Croatia. GAZ-SYSTEM will increase the capacity of its LNG terminal in Świnoujście to 8.3 bcm by 2023, while after ten years of lease, Lithuania’s Klaipeda terminal will finally purchase FSRU in 2024.
As LNG enters the region from multiple directions we have to make sure that we are prepared with a well-functioning gas system to receive all these new volumes.
„Infrastructure projects of system operators serve as insurance for guaranteeing continuous supply for costumers, while also offering business opportunities for cross-border trading. The gas sector’s evaluation in the last decade has proven that system operators must ’pay-to-win’ that is investment are the essence of market development,” said Szabolcs I. Ferencz, CEO and Chairman of FGSZ.
Daniel Garai, CEO of CEEGEX underlined that the LNG terminal in Croatia changed the landscape and moved transactions towards day-ahead bookings, which are becoming good opportunities for traders to exploit exchange-based spot trading.
Philippe Ducom, President of ExxonMobil Europe pointed out that energy transition is one of the biggest challenges of our generation. Innovation and investment on scale will be key to achieving net-zero targets. Supportive policy measures are also required but there is no one silver bullet and technology neutrality is important to reach our climate ambitions.
Vitaliy Baylarbayov, Deputy Vice President of SOCAR said the current situation had once again highlighted the importance of security of gas supply. That is why it’s a major achievement, that through the Southern Gas Corridor project, SOCAR is contributing to Europe’s growing gas demand with Azerbaijani gas.
Attila Sagodi emphasised the importance of a regulatory framework, which comes after long-term investment decisions and strategies, that might concern both the future of natural gas and new and alternative fuels such as biomethane and hydrogen, blue hydrogen first and green hydrogen later.
Attila Steiner, Secretary of State at the Ministry of Innovation and Technology emphasized that Hungary recognised the strategic role of natural gas in the energy transition adding that all low-carbon energy sources, including natural gas, are part of a sustainable energy mix to meet the growing demand for reliable, affordable and clean electricity.
The conference was closed by stakeholders discussing the potentials of the V4 regional cooperation and the future of the North-South Gas Corridor.