Cornelia Meyer, macro-economist, energy expert and advisor to OPEC, said the reopening of China following the zero-Covid-19 policy and the price ceilings imposed on the purchase of energy products from Russia will pose challenges to the balance of the global energy market.
She also expected the demand for gas to grow one percent this year, while the supply to increase to less than one percent.
In an interview with Asharq Al-Awsat, Meyer said the shrinking demand for gas in Europe was a result of the war in Ukraine, as European countries sought to curb their reliance on Russian gas.
This will inevitably increase the demand for the liquefied natural gas (LNG), which will lead to a rise in the cost of LNG shipments and an increase in gas prices in Europe and around the world, according to the expert.
Nonetheless, Meyer emphasized that with the growth of Chinese demand, energy markets will become more stable.
“With China emerging from the zero Covid-19 policy, the demand for LNG will increase, making it difficult for Europe to control the shipped supplies,” she said.
Meyer noted that the current situation was due to the fact that the gas price ceiling set by the European Union to punish Russia could be counterproductive in attracting the required quantities of gas, as there are fewer buyers, which gives them great bargaining power.
According to the OPEC advisor, this comes at a time when the demand for oil has exceeded pre-pandemic levels that topped 102 million barrels per day, while the market is still tight, with OPEC’s surplus production capacity at about two barrels per day.
Growth and production of LNG supplies would remain limited until 2025 amid a very long business cycle, she noted.
The Ukrainian war, according to the expert, led to a decrease in Russian gas consumption and production and a redirection of Russian crude oil trade routes away from Europe to Asia, specifically through China, India and Türkiye, where Russian crude is bought at a huge discount.
Regarding the energy markets, Meyer said she believed that the lack of investment was the main challenge in the hydrocarbon sector.
“Saudi Arabia and the UAE invested reliably, while international oil companies were reluctant to do so due to profitability concerns, amid the Covid-19 pandemic and environmental legislation,” she remarked, adding: “Saudi Arabia is not a player in the global gas and LNG markets, but it is set to become a major player in hydrogen in the future.”
