Europe could face stiff competition from China for shipped gas this winter

European countries will leave themselves open to gas shortages this winter if they expect a repeat of the high temperatures and low competition the continent enjoyed last year, a new report has warned.

Energy consultancy Cornwall Insight said that demand for gas in China had increased by about 6% so far this year.

Last year China was still going through Covid-19 lockdowns, pushing down the country’s economy and its thirst for energy.

It meant there was less competition as European countries cast around for an alternative to the Russian pipeline gas which was shut off as the Kremlin decided to try to conquer Kyiv in February 2022.

Most of the world’s gas is moved by pipeline. But there are also ships that cool down gas so much that it becomes liquid – so called liquid natural gas – and transport it around the world.

But this year Europe will have to compete with the added demand from China for this liquid natural gas (LNG) and it could face weather that is colder than last year’s rather mild winter, which could turn up demand.

“In a landscape of increasing global competition, Europe’s LNG supply faces growing uncertainty,” said Dr Matthew Chadwick, lead research analyst at Cornwall Insight.

“A multitude of factors, from weather patterns to surging demand in Asia, leave Europe open to potential gas shortages if it places its faith in another high-temperature, low-competition winter.”

He called on Europeans to sign long-term contracts, rather than just buy the LNG as it is needed.

“As China’s economic recovery drives up gas demand and worldwide events send prices skyrocketing, Europe can no longer cling to the illusion of on-demand LNG.

“To secure gas supply this winter, they must make a concerted effort to shred their reliance on short-term, risky LNG purchases.

“It is crucial they focus on building strong partnerships, improving infrastructure and securing supply chains, so Europe can safeguard its energy security while working towards its longer-term decarbonisation goals.”