EU Considers to Importing LNG from Australia
Recently, Dominique Ristori, the General Director of energy of European Commission expresses that EU is considering to treating Australia as a potential LNG supplier. For ensuring energy supplying security, EU may be willing to pay extra fees. The statement attracts attention while the plan is still far from reality.
Firstly, energy surrogate country is still difficult to help EU realize energy dependence on Russian energy. European gas import relies heavily on Russia. Faced with the risks of geopolitics, EU is urgent to seek other alternatives. Although EU can import LNG from Norway or Algeria, neither Norway nor Algeria is willing to improve production to meet the demands that EU get rid of dependence on Russian energy.
Secondly, export LNG from Australia to EU still has a series of difficulties. Australia has already improved its production and export volume. But most of export volume is used for performing long-term contract. Only 30% of production can be sold on spot market. For example, if Japan accelerates its plans to recover nuclear electric power generation, the ratio may be also raised. Meanwhile, European imported facilities have bottleneck of capacity. The largest gas storage base is located at the northern coast of France. Other facilities are located at Poland and Lithuania.
Thirdly, price is the largest obstacle that EU imports LNG from Australia. Price of gas in Australian market is generally higher than that in European market. If EU chooses to purchase LNG from Australia, EU may pay high cost. Vice President of Santos expresses that for high freight, LNG exported from Australia to Europe has less competitive force in European market. However, more and more purchasers are willing to pay higher price for energy supply security.
In general, EU has less possibility for buying LNG from Australia. But, if geopolitical situation deteriorates further, Australian LNG may become expensive alternative of Russian gas.
Firstly, energy surrogate country is still difficult to help EU realize energy dependence on Russian energy. European gas import relies heavily on Russia. Faced with the risks of geopolitics, EU is urgent to seek other alternatives. Although EU can import LNG from Norway or Algeria, neither Norway nor Algeria is willing to improve production to meet the demands that EU get rid of dependence on Russian energy.
Secondly, export LNG from Australia to EU still has a series of difficulties. Australia has already improved its production and export volume. But most of export volume is used for performing long-term contract. Only 30% of production can be sold on spot market. For example, if Japan accelerates its plans to recover nuclear electric power generation, the ratio may be also raised. Meanwhile, European imported facilities have bottleneck of capacity. The largest gas storage base is located at the northern coast of France. Other facilities are located at Poland and Lithuania.
Thirdly, price is the largest obstacle that EU imports LNG from Australia. Price of gas in Australian market is generally higher than that in European market. If EU chooses to purchase LNG from Australia, EU may pay high cost. Vice President of Santos expresses that for high freight, LNG exported from Australia to Europe has less competitive force in European market. However, more and more purchasers are willing to pay higher price for energy supply security.
In general, EU has less possibility for buying LNG from Australia. But, if geopolitical situation deteriorates further, Australian LNG may become expensive alternative of Russian gas.
