EU opens joint gas buying scheme as fears are raised over supplies for coming winter

Meanwhile consultant McKinsey has warned that the EU has to reduce gas demand significantly if it is to manage the upcoming winter without Russian gas supplies. McKinsey says Europe needs to reduce its gas demand by 55bcm.
In a new article, A balancing act: Securing European gas and power markets the company says that that a total cessation of Russian imports could reduce Europe’s supply by 25 bcm and if Asian LNG demand rebounds it could take 35 bcm of supply. If winter 2023 is colder than 2022 it could boost demand by 15 bcm.
McKinsey warns that less than half (43%) of EU manufacturers would be able to further reduce gas consumption while maintaining output over the next two years. It says that even if efforts to reduce gas use are successful, there remains a risk of volatile gas prices and potential supply disruptions.
Namit Sharma, Senior Partner at McKinsey said: “Our analysis shows there is little bandwidth to further reduce Europe’s gas demand without substantial economic damage. If the EU achieves all its gas-savings measures this could see a 24% reduction in consumption yet other potential factors such as more competition from Asia could reduce Europe’s supply by an even greater amount.
“The many variables at play will produce significant uncertainty and Europe’s businesses may need to prepare to mitigate these risks. This may require businesses to consider diversifying their energy sourcing and managing demand, investing in natural gas substitutes or storage and closely monitoring movements in the energy market.”
The warning comes as the European Union EU opened a new scheme to try to secure supplies for the winter. European companies can register by 2 May for a joint gas buying scheme launched by the EU. A platform will collect offers from global suppliers to match the companies’ demand, and then matched suppliers and buyers will negotiate gas contracts.

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