Germany’s biggest power producer RWE (ETR: RWEG_p ) said Europe needed more investment in onshore liquefied natural gas (LNG) terminals to secure long-term supply of fuel shipped by world gas producers.
On the other hand, Andree Stracke, chief executive of RWE, also told the Gastech conference in Milan that he does not think Europe will abandon Russian gas forever because of the cost to industries and households.
Europe is facing the worst gas supply crisis in its history, with energy prices skyrocketing and German importers even discussing possible rationing in the European Union’s biggest economy, after Russia cut westward flows. .
Russia’s Gazprom (MCX: GAZP ) said on Friday that the Nord Stream 1 gas pipeline, Europe’s main supply route, would remain closed because a turbine at a compressor station leaked engine oil, triggering wholesale gas prices.
Analysts estimate that Europe will need to import some 200 million tons of LNG over the next decade to undo its link to Russian gas. Germany, Europe’s biggest importer of gas from Russia, would need some 40 million tonnes of LNG to replace the 50 billion cubic meters (bcm) of gas it used to receive from Moscow by pipeline.
“If you want to bring more LNG to Europe in the long term, you also need more investments in land-based terminals. FSRUs (floating storage) are supposed to be a short-term solution,” Andree Stracke told the international Gastech conference in Milan.
He added that he doesn’t think Europe will walk away from Russian gas forever. “The world lives in cycles. I doubt that Europe can afford these energy prices for a long period.”
EU ministers will discuss a range of options at a meeting on Friday, including limiting the price of imported gas, limiting the price of gas used to produce electricity or temporarily removing gas-fired plants from the current EU system for setting electricity prices.
Stracke pointed out that imposing a price cap will never solve the energy crisis, adding that the possible solution would be to reduce demand.