Extract from our "Europe’s Gas Strategy: So Far So Good" research paper, published on the 6th April 2023. Register for a free trial* to access the full paper.
A year ago, Russia’s gas embargo seemed like an insurmountable challenge for Europe. Somehow managing to avoid a recession, Europe seems to have achieved extraordinary progress so far in coping with this exceptional shock, albeit with very large financial costs in 2022 and high inflation. In 2022, the EU spent some EUR 400 bln to import natural gas, up from about EUR 120 billion in 2021. Large investments have been made in energy efficiency and diversification, which should yield concrete results from 2025. For the next winter (2023/24), another severe gas crunch is a risk; but after a year of planning and investments, such a scenario can be avoided or ameliorated by better management of supply from global sources. Beyond that, there ought to be more stability in gas supplies to Europe. In this note, we take a QnA approach to update our understanding of the situation. The main upshot is that the inflation profile in Europe lags that of the US by about four months, due mainly to the price profile of natural gas prices. A successful re-mapping of gas supplies should lead to greater structural stability in inflation.
The full report contains the following sections:
- What have the European countries done in response to the Russian gas embargo?
- Did Europe effectively deal with the first winter without Russian gas?
- How much did the remedial actions cost?
- How did Europe pay for these expenses? Mainly through sovereign bond issuances.
- Which countries benefited from the increase in Europe’s demand for LNG?
- Will Europe face a similar problem next winter or have they found a permanent solution?
- Bottom line
* Access to a free trial of our research is limited to professional investors. Terms & Conditions apply.
Find out more about our research service by clicking on the brochure below:
Subscribe to our insights
If you are interested in our content, please sign up below and we will deliver Eurizon SLJ insights right to your inbox.
I consent to my data being collected and stored for the purposes of providing me information regarding my enquiry and related services. If you have any questions about your data please contact us at research@eurizonslj.com
Sources
Disclosure
This communication is issued by Eurizon SLJ Capital Limited (“ESLJ”), a private limited company registered in England (company number: 09775525) having its registered office at 90 Queen Street, London EC4N 1SA, United Kingdom. ESLJ is authorised and regulated by the Financial Conduct Authority (FRN: 736926). This communication is treated as a marketing communication intended for professional investors only and is provided only for information purposes. It has not been prepared in accordance with legal and regulatory requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. It does not constitute research on investment matters and should not be construed as containing any recommendation, advice or suggestion, implicit or explicit, with respect to any investment strategy or financial instruments, or the issuers of any financial instruments, or a solicitation, offer or financial promotion relating to any securities or investments. ESLJ and its affiliates do not assume any liability whatsoever for the contents of this communication, save to the extent agreed in any written contract entered into between ESLJ and the recipient, and do not make any representation or warranty as to the accuracy or completeness of any information contained in this communication. Views are accurate as at the time of publication. Opinions expressed by individuals are their own and do not necessarily reflect those of ESLJ or any of its affiliates. The value of any investment may change and an investor may not get back the original amount invested. Past performance is not an indicator of future performance. This communication may not be reproduced, redistributed or copied in whole or in part for any purpose. It may not be distributed in any jurisdiction where its distribution may be restricted by law and persons into whose possession this communication comes should inform themselves about, and observe, any such restrictions.
ESLJ-300523-I3
