Energy crunch eases in emerging markets, thanks to Europe’s warm winter
Energy crunch eases in emerging markets, thanks to Europe’s warm winter
Since Russia’s invasion of Ukraine, the resulting energy crisis in Europe has drawn a lot of attention. Demand for liquefied natural gas from sources other than Russia skyrocketed. LNG is superchilled and can be transported by ship instead of pipeline.
But Europe’s natural gas woes also had a big impact on emerging markets around the world, including India, Thailand and countries in Latin America. They have scrambled to deal with energy crises of their own in the past year as so much of the gas they’d planned for was rerouted to Europe.
But in March, many emerging markets brought in more LNG than at any point since last summer, indicating an easing of the supply problem.
After the Ukraine war started, Europe’s willingness to pay top dollar for LNG squeezed less wealthy nations, per Raymond James energy analyst Pavel Molchanov.
“Those economies simply cannot afford to pay three or four times what they normally pay for fuel,” he said.
With less natural gas, Bangladesh and Pakistan, for example, have endured blackouts and power rationing in the past year. That’s affected daily life — and major economic sectors like garment manufacturing.
Bangladesh, home to almost 170 million people, uses natural gas to generate the majority of its electricity. The country cut power 85 out of 92 days in late 2022, Reuters reported.
Now, gas prices are lower because Europe has been buying less of it. The mild weather there has helped, said Bogdan Prokopovych at the University of Massachusetts Amherst.
“There were some colder days, but luckily, the winter was not as bad as we were anticipating,” he said.
So Bangladesh — along with Pakistan, Indonesia and Vietnam — is buying more LNG again.
But last year’s LNG shortage may have disrupted the push to replace dirtier fossil fuels like coal with natural gas, according to Anna Mikulska of Rice University’s Baker Institute.
“They ended up being concerned about the future of LNG, which basically will translate into reluctance to invest in LNG,” she said.
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