Europe has stockpiled enough fuel to last the winter season but poor countries like Pakistan will suffer as they find themselves locked out of the natural gas market due to unexpectedly high demand and deeper costs, reported Bloomberg.
An energy analyst at Credit Suisse Group AG told Bloomberg that energy security concerns in Europe are driving energy poverty in the emerging world. Europe is sucking gas away from other countries whatever the cost.
Much higher costs will be borne by the world’s poorest countries as Europe’s unexpectedly high demand has left emerging market countries unable to meet today’s or tomorrow’s needs, and the most likely consequences such as blackouts and fuel shortages could last a decade.
A little change in weather in Pakistan, India, Bangladesh, and the Philippines has paused any chances of an immediate energy crisis, but relief will only be temporary. Winter has come and long-term supplies are unlikely. The strong US dollar has worsened the situation, forcing countries to choose between buying fuel and paying off their debts. Given the circumstances, global fuel suppliers are increasingly hesitant to sell to countries that may be on the verge of default, the report added.
Global warming-related damage, such as the ravaging floods in Pakistan, is wreaking economic havoc on developing countries, prompting leaders at this month’s climate talks in Egypt to discuss arranging support for those in need.
Regardless of the imminent threat, Europe has fast-tracked the construction of floating import terminals in order to bring in more fuel in the near term, with plants already secured by Germany, Italy, and Finland. In September, the Netherlands began importing LNG from new floating terminals.
Overall, natural gas demand in Europe is expected to increase by nearly 60 percent by 2026, and cash-strapped nations will suffer.
Qatar and the United States have resumed accepting bids from European importers looking to fill their inventory and for the first time, emerging economies such as Pakistan, Bangladesh, and Thailand must compete on price with Germany and other economies many times their size.
Recently, Pakistan was unable to finalize a six-year agreement that would have begun next year last month following several failed short-term purchases.
The momentum behind natural gas growth in developing economies has slowed, particularly in South and Southeast Asia, undermining gas’s credentials as a transition fuel, according to the International Energy Agency’s World Energy Outlook 2022.
It bears mentioning that Russia has been more than willing to provide fuel to Pakistan, India, and other countries that have been shut out of the spot market, but an assortment of political and geopolitical issues coupled with economic bottlenecks have prevented the Pakistani authorities to get a deal done with Moscow.
Critics of Pakistan’s government have questioned why the country’s gas reserves have not been exploited and authorities just love playing it hard-to-get. In any case, the government this year, or whoever takes the reins next year, will have to do a lot, such as rationing fuel and scheduling blackouts when we actually run out of fuel to run our industries.
