Europe is the biggest victim of the gas war behind the conflict between Russia and Ukraine

Russia has made a fortune riding the wave of Europe's energy crisis. According to data from Index mundi, starting in March 2021, the average price of Russian natural gas exports began to rise rapidly, peaking at $38.03 / million British thermal units by the end of 2021, about four times the average price of US natural gas exports in the same period, and 10 times the average price of Russian natural gas exports in early 2020.

4. Europe is suffering from rising energy prices

According to the data released by the IEA, Europe's imported natural gas energy in 2021 is about 60,92,137 million megawatt-hours, combined with the TTF's natural gas futures settlement price calculation can be obtained, if Europe maintains the current natural gas imports, the price rise caused by the European energy crisis will increase the annual cost of natural gas imports in Europe by about 700 billion euros. In this geopolitical gas war, European countries are the biggest victims.

The future of Europe's energy market: Finding a way through the fog

1, in the short term, the energy crisis will continue, and American natural gas will take the opportunity to enter the European market

As the conflict between Russia and Ukraine continues to intensify, the sanctions and counter-sanctions between Western countries and Russia are increasingly severe, and the war concerning the world's important energy suppliers will also make the international energy market in continuous turmoil; Europe's energy crisis will continue until the supply of natural gas and other energy sources is resolved.

In the short term, in the context of the European energy crisis, the United States may become the "savior" of the European energy market; Since the discovery of large-scale shale gas in the early 2000s, natural gas exports from the United States have been on the rise, reaching more than 5.28 trillion cubic feet by 2020. At the end of 2021, the United States once surpassed Qatar in monthly LNG exports, becoming the world's largest LNG export country that month.

Before the European energy crisis, it was difficult for American natural gas to squeeze the Russian natural gas market in Europe through normal commercial competition, mainly for three reasons: first, compared with Russian natural gas, American shale gas is more difficult to exploit, and the early research and development and equipment investment is larger, and the cost is higher; Second, natural gas from the United States reaches Europe by sea. In order to improve transportation efficiency, natural gas needs to be liquefied into LNG(liquefied natural gas), and the liquefaction process brings additional costs to natural gas transportation. The third is that the cost of transporting gas by sea is higher than by pipeline in Russia. But as tensions between Russia and Ukraine rise, Russia and Europe fall into full confrontation, and rising gas prices provide huge profit margins for American gas; In the coming period of time, the United States may increase investment in LNG compression equipment and increase the supply of LNG products to seize the European natural gas market.

2. In the long run, renewable energy is the only way out for Europe

In the long run, Europe will have to continue to "keep a distance" with Russia under the influence of the United States, and the energy gap in Europe will rely on the United States to fill for a long time in the future. For fossil-energy poor European countries, this is "out of the dragon hole, into the tiger's den"; In order to get rid of other countries' control of their energy lifeline and achieve true energy, economic and even political independence, European countries must vigorously develop new energy sources. According to Eurostat, the share of renewable energy in energy consumption in the EU-27 has continued to rise since 2011, reaching 20.95% in 2020, an increase of about 2.5 percentage points year-on-year. Although this proportion is already very high in the world, new energy has the disadvantages of unstable power generation and high cost compared with traditional energy, and Europe still has a long way to go if it wants to fully rely on new energy to meet its internal energy needs. European countries have become the biggest victims of the gas war, which is caused by the conflict of interests between the United States and Russia.