Europe's Energy Crisis Exacerbated by Short-Term Gas Deals
Europe's energy crisis has been exacerbated by its over-reliance on short-term gas supply contracts, according to MET Group CEO Huibert Vigeveno. The company, which is expanding in northwest Europe, believes that long-term LNG deals would have helped the continent navigate this year's soaring prices.
The war in the Middle East has cut off about a fifth of global liquefied natural gas flows, causing European gas prices to more than double this year. Asian buyers are snapping up flexible spot cargoes, setting the stage for increased competition between regions this winter.
Vigeveno noted that 'a lot of long-term LNG supply globally goes to Asia, while Europe is still more spot-driven,' adding that having more long-term contracts in Europe would have helped mitigate the crisis. However, utilities have been hesitant to commit to such deals due to projected declines in demand and stricter climate targets.
The European Union's reliance on the spot LNG market is high, with about 30% of its imports being spot-based in 2024, according to the EU Agency for the Cooperation of Energy Regulators. MET Group is considering opening an office in the US, where it buys substantial volumes of LNG.