Head of the International Energy Agency takes the floor at Singapore International Energy Week accusing OPEC+ of cutting production as risky
Oil cuts and soaring LNG demand have opened the door to the world’s first energy crisis
(sustainabilityenvironment.com) – What we find ourselves in is the “first real global energy crisis“, a phase of market turmoil that leaves no one out and on which weighs today several factors. This is explained by Fatih Birol, Executive Director of the International Energy Agency, speaking from the 15th Singapore International Energy Week stage.
Price volatility and supply disruptions in Europe have created a kind of domino effect on the world gas market by bringing LNG up, both in economic and demand terms; in this area the room for maneuver is gradually being reduced especially now that the floods in Nigeria have completely blocked the production of liquefied gas; and that China has ordered its state-owned companies to stop LNG sales in Europe and Asia in order to increase domestic stocks. According to the IEA number one, these major European and Chinese appetites will further restrict the market in 2023, as demand growth will not follow an equally high supply. Birol estimates that only 20 billion cubic meters of new LNG capacity will be added next year.
The oil producers’ decision to openly challenge the West further complicates the situation. OPEC will ignore the demands of the US, France and the European Union by reducing production by two million barrels a day in an attempt to support oil prices. A measure considered by the director of the Agency, rather “risky”. “[It’s] particularly risky since several economies around the world are on the verge of a recession, if we’re talking about a global recession … I found this decision unfortunate”.
And today the Old Continent feels all the pressure of the moment. According to the IEA at least in the short term and with the blessing of the climate, it should stay afloat. “Unless we have an extremely cold and long winter, and do not run into new surprises, such as the explosion of the Nordstream pipeline, Europe should cross this winter with some economic and social bruises,” he added. But Birol also stressed that the current energy crisis can be a turning point in the history of energy to accelerate towards clean sources and to form a sustainable and safe system. “Energy security is the number one driver [of the transition],” said Birol, announcing that this 2022 is expected to close with 400 GW of renewables installed worldwide.
