00:00Ana Maria Hala Makarevich is lead analyst at the Institute for Energy Economics and Financial Analysis.
00:07Thank you so much for joining us.
00:08I just want to ask you about what kind of winter we can expect to see in Europe.
00:14Should Europeans brace for higher gas prices, even rations?
00:19Hi, yes, good afternoon.
00:20Well, I think Europe is betting for a mild winter.
00:24That's the only way I can see it.
00:26Because the way things are showing are not very promising on the energy sector.
00:34We have the prices going up.
00:36Today we had the price of the TTF went up to 93 euros per megawatt hour.
00:43Actually, it's the highest since December 2022.
00:46We have a record level of lowest storage since we started even recording the storage in Europe.
00:54So we are not really prepared for a very strong winter.
00:59So we are going to see high prices affecting bills in both gas and electricity.
01:06And it depends also on the weather.
01:09And we see like right now we have storms in certain parts of Europe.
01:12So this is kind of worry that what are we going to expect?
01:17China, as we've just reported, is calling on its oil and gas industry to increase local production.
01:23This week also we heard the UK greenlit their Jackdaw North Sea gas project.
01:29Is energy self-reliance the smart move for governments at this time?
01:34The smart move is reduce gas demand.
01:37That's really the only way forward.
01:40And invest more on homegrown renewables.
01:44Energy efficiency, that works quite well.
01:48If we could reduce our energy consumption using more energy efficiency methods.
01:54For example, in the UK, we can invest also more in heat pumps.
01:59Right now I don't have gas at home.
02:03Everything is electricity now.
02:05So there are ways to go forward.
02:08Because what we have seen right now is that we are in another crisis.
02:12We could be in another crisis in two, three years' time.
02:15Because of our dependency on fossil fuels.
02:18Now fossil fuels is a global commodity.
02:22LNG is a global commodity.
02:23And it affects everyone.
02:26When the prices go up, when the demand goes higher in one region to the other.
02:31It affects the global market really.
02:33Yeah, good point.
02:35We've also seen Brent crude oil hitting at least a six-month high.
02:39I think it's around $117 a barrel.
02:43How much pressure is that going to add on an already energy-tight winter in Europe?
02:49We might see some demand destruction both on oil and gas in the continent.
02:57Maybe some users will decide to use less the cars.
03:04We have seen already this year a lot of EVs coming into place.
03:09Lots of people have realized that maybe there are other options.
03:12So I think there's an opportunity to find ways to go around in the short term is difficult.
03:21So what we could see in the short term will be some demand reduction.
03:27Europe is also competing with Asian economies for natural gas.
03:31Practically, what does that mean for the months ahead?
03:35Actually, it's not only with Asia.
03:37If the El Niño is strong, it affects the southern hemisphere.
03:44So countries like Brazil, Colombia, Ecuador, that they use a lot of hydro for their power generation,
03:52must be in trouble these coming months.
03:56And they might need to import more LNG from the U.S.
04:00Okay, the demand is not as much as in Asia, but still it will be a competition there.
04:05So we are going to be competing with Asia, with some Latin American countries
04:11for the same LNG coming from the U.S. that is expensive.
04:15Europe pays the most expensive price for the LNG coming from the U.S.
04:20So that is going to be tricky because we might need to pay even more for this LNG.
04:27Yeah, the writings on the wall, behavior change, really important.
04:30Thank you so much for speaking to us.
04:31That's Ana Maria Kala Makarevic from the Institute for Energy Economics and Financial Analysis.
04:38Thank you so much for listening.
