Russian war shifts, for the time being, the direction in which the sector is moving
Yet even the greenest politicians in Europe recognise that the political necessity of replacing lost Russian gas will not come just from energy conservation. Up to last year, natural gas fuelled nearly a fifth of EU electricity generation.
Nord Stream has become a stranded asset itself. Non-Russian corporate shareholders have written down the worth of the pipeline on their respective balance sheets. Nord Stream 1, piping gas since November 2011, had a combined stated value on the balance sheets of energy groups of up to €8bn until last year. Since then, minority shareholders, German utility Eon, France’s Engie and Gasunie of the Netherlands have announced combined impairments of more than €1.2bn.
Regasification terminals built onshore are costly, though, easily more than $160mn for every tonne of LNG capacity, says analyst Kaushal Ramesh at consultants Rystad Energy. He foresees a sudden change in Europe’s LNG demand, from about 72mn tonnes a year in 2021 to more than 110mn tonnes a year from now until 2030.So a different and more flexible solution has come into vogue. Floating storage and regasification units offer a faster and nearly 40 per cent cheaper alternative.