Plugged In: the energy news podcast
Coming from the heart of the Montel newsroom, Editor-in-Chief, Snjolfur Richard Sverrisson and his team of journalists explore the news headlines in the energy sector, bringing you in depth analysis of the industry’s leading stories each week.
Richard speaks to experts, analysts, regulators, and senior business leaders to the examine not just the what, but the why behind the decisions directing the markets and shaping the global transition to a green economy.
New episodes are available every Friday.
Plugged In: the energy news podcast
Looming LNG oversupply: what will drive gas prices in 2026?
The global LNG market has been tight since 2022, with prices remaining around USD 10/MMbtu (about EUR 30/MWh).
However, with the one-year countdown to the complete phase-out of Russian gas starting next month, and a new wave of LNG capacity from the US and Qatar expected to come online from next year - could prices drop as low as USD 7/MMbtu?
In this episode, Richard sits down with LNG analysts and geopolitical experts to discuss how Asia could see a strong demand rebound in the next few years, why Germany's declining industrial gas consumption puts downward pressure on long-term demand into Europe. But there is a note of caution as structural challenges in the US LNG construction industry are likely to cause supply delays.
Host: Richard Sverrisson - Editor-in-Chief, Montel News
Contributor: Laurence Walker - Deputy Editor-in-Chief, Montel News
Guests:
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group.
Saul Kavonic - Head of Energy Research, MST Financial.
Editor: Oscar Birk
Producer: Sarah Knowles
Hello listeners and welcome to Plugged In - The Energy News podcast from Montel, where we bring you the latest news issues and changes happening in the energy sector. There's been a flurry of activity in global gas markets over the past few weeks. Not least, the ongoing peace talks between Ukraine and Russia brokered by the US and EU. In addition, market focus has been on a potential glut of LNG from the US, the UK pulling financing for totals, Mozambique, LNG development and a war of words between the US' Venture global and energy major Shell. But back to the peace talks. This isn't the first random negotiations we've seen since Russia invaded Ukraine back in February, 2022, and so far it's looking like they won't be the last. So how are natural gas net LNG markets responding to the idea of peace or lasting ceasefire at least? In this episode, I'll be speaking to market experts about what the next 12 months will bring for the global LNG market, the natural gas market, and the outlook for demand and supply. But first I'll be speaking to our deputy editor in Chief Lawrence Walker. Welcome back to the podcast, Lori.
Laurence Walker - Deputy Editor-in-Chief, Montel News:Thank you, Richard.
Richard Sverrisson - Editor-in-Chief, Montel News:My first question would be really how have global LNG and gas markets responded to these peace talks that we're seeing or these discussions about Peace talks? Obviously that we are very far away from any kind of deal.
Laurence Walker - Deputy Editor-in-Chief, Montel News:Yes. Obviously as you say, we're, there still seem to be some, somewhere away from reaching any actual deal, but certainly played into sentiments, prices have dropped considerably. I think we're so at a time of, at a time of speaking around the lowest since April last year. So we're below 30 euros a megawatt hour speaking with people on the market. Potentially, if there is a deal reach, we could see prices drop even further, even to 20, perhaps or below, below 20. This. It does reflect some reduction in the risk premium, but I guess for the time being, it's not gonna have any major impact on supply demand. If there is a deal. I think what people are looking to is perhaps a possible return of Russian flows and how that would impact supply. And also perhaps Russia stopping its strikes on gas infrastructure in Ukraine, these sort of things. But it's very much sentiment driven and I think also we have to bear in mind. What's been playing into these price losses has been things like a relatively mild winter. So far. The demand hasn't been terribly strong. We've had record US LNG imports last month and overall, LNG import to Europe, I think about an eight month high. So there's no shortage of supply as well. So there's, it's yeah, obviously the peace talks, but also other things.
Richard Sverrisson - Editor-in-Chief, Montel News:There's a plethora of factors may be contributing to that slightly softer prices, which is obviously a welcome state of affairs after all the spikes and the very high price levels that we've seen in recent years. Now I wanna focus now Lori, on, on a story that you basically drove forward and Montel investigation that uncovered the likelihood that Russian gas has been blended into supplies. Going into the UK via its interconnections with France and Belgium. Can you explain what's what's happening here and what, what loopholes it shows in the current system or what flaws it shows that currently exist in the interconnected gas market?
Laurence Walker - Deputy Editor-in-Chief, Montel News:Yes. It certainly shows the complexities of sanctioning gas. What we've found in this instance, the UK banned the import of all Russian gas in 2023, but mainland Europe still imports Russian gas and predominantly LNG. These cargoes arrive at European ports, then they get mixed into the gas system. And once it's gone in there, there's no way of knowing obviously what proportion is of Russian gas. There's no sort of monitoring as such. Therefore, this blend can be exported. Fire Interconnectors. So we have Interconnectors with Belgium and the Netherlands and while there hasn't been a huge amount so far this year, these sort of flows do tend to pick up over the winter months when we need more supply to meet heating demand. While it's obviously maybe not new news as such, that's. That the gas gets blended. What I think is important is that we've spoken with people all the way along supply chains, so people from pipeline operators, sanctions, lawyers, traders, regulators, cargo inspectors, and obviously even the government all really have just confirmed that. These sanctions are there, but there's no real guidelines. So as such, no one's really taking responsibility to enforce what's flowing into the UK, what's going on. And the authorities in effect seem to be passed in the buck. I'd say, in terms of responsibility.
Richard Sverrisson - Editor-in-Chief, Montel News:You mentioned other European countries is this an issue elsewhere and do you think that we see countries turning a blind eye to Russian imports and. God is blending them into their own supply chain and sending it out all across Europe.
Laurence Walker - Deputy Editor-in-Chief, Montel News:It will certainly, what we're looking at with the uk it's a sort of a focused point. The UK is one of the only countries which has done an outright ban on Russian gas so far. So in, in Europe, yeah. They can still blend the stuff. It's still legal to do, yes, the problem will come beyond then. And I think that the concern is that if the sort of UK sanctions and the way they're being dealt with, the way they're being policed, monitored. It's gonna be a kind of a blueprint for the rest of Europe. I think it's gonna be, you could easily see gas from Russia continuing to leak in, via the turkstream, through Turkey, through other routes. And also in terms of monitoring the LNG. And I think there will be concerns about, once LNG cargoes out on the water, or if it gets moved or there's a ship to ship transfer or something of this sort. Again, it's very hard, harder to monitor. We've looked at sanctions on other commodities in the past, like coal, biomass wear. It's a lot easier to track. They have more of a footprint as they go. Gas is a difficult beast to track. And as a result, people don't seem to be making an effort to find a way of enforcing it there. And I think that's the problem. It's, it comes to the stage where it becomes. Not so much a reason, as a, as an excuse. I'd say.
Richard Sverrisson - Editor-in-Chief, Montel News:Just a final question, Laurie. The guests in the main episode, they talked about the price for gas in dollar terms and you mentioned euros per megawatt hour. So if you say 30 euros per megawatt hour or 20 euros per megawatt hour, what's in, what's that in dollar terms?
Laurence Walker - Deputy Editor-in-Chief, Montel News:30 euros, megawatt hour would be something like around 10. Just over $10. MMbtu. So 20, we're looking at sub seven, $6.80 or so.
Richard Sverrisson - Editor-in-Chief, Montel News:Metric million British thermal Unit, is it?
Laurence Walker - Deputy Editor-in-Chief, Montel News:Yes, that's it. Yep.
Richard Sverrisson - Editor-in-Chief, Montel News:MMbtu. Yep. Thank you very much Laurie. Very helpful and thanks for setting the scene for us.
Laurence Walker - Deputy Editor-in-Chief, Montel News:Thank you, Richard.
Richard Sverrisson - Editor-in-Chief, Montel News:I'm pleased to welcome back two of our regular commentators to the podcast, Henning Gloystein, managing Director of Energy and Resources at Eurasia Group. And Saul Kavonic, head of Energy Research at MST Financial. Warm welcome back to the podcast guys. I thought I'd start off Saul by asking you about to the current sentiment in global LNG and buy implication of the global gas market what, where are we at the moment?
Saul Kavonic - Head of Energy Research, MST Financial:The context would be, obviously the market spiked significantly in the wake of the Ukraine war in 2022, where Russia turned off the taps to most the gas into Europe. That's why Europe suck a lot of LNG away from the rest of the world, including emerging Asia. And there's not been a lot of new LNG supply that has come online since then. And so the market has been reasonably typed over the last three years and it's obviously come down off those very lofty peaks in 22, but we're still seeing prices hold up essentially above $10 to this day. The outlook is a bit different because we are starting to see a very significant ramp up of supply from both Qatar and the United States. Beginning in 2026, but particularly in earnest from 2027. And that pace of growth is forecast to outpace the growth in demand. And as a result, we're expecting softer prices. I think where an element of strong debate will be is what does soft prices actually mean in dollars of MMbtu? These days because the last time we saw significantly oversupplied market was five years ago. And a lot has changed since then. But I think from a market perspective, everyone is wondering on how much oversupply will eventuate, what does that mean for pricing? And how long will that last given United States continues to take final investment decision on new projects regardless of this softer outlook.
Richard Sverrisson - Editor-in-Chief, Montel News:Absolutely. And also and higher domestic gas prices as well in the US but what's your view on demand in Asia? So what's the outlook there for the winter months?
Saul Kavonic - Head of Energy Research, MST Financial:A lot of it's obviously just gonna be to dependent on the severity of the winter. I think what's the most interesting debate at the moment is. If we do start to see LNG prices drop below $10, towards nine, eight, potentially lower, do we see a strong demand slide response, particularly from emerging Asian economics? And I think that's now we can do academic kind of studies on that, the proof is in the pudding, so to speak, and all that demand, that was a section, the demand destruction that occurred in Asia, a result of europe's thirst for LNG in 2022. A lot of that still hasn't come back. And the question is. Does it come back? Is there latent demand there, which can mop up a period of oversupply and actually prevent, or at least shorten a period where you would have supply response out of the US, which essentially entails much lower pricing points? And I think the answer to that question will determine if a weak price outlook means $8, or if a week out price look means $5 on a year average than say 2027 or 2028.
Richard Sverrisson - Editor-in-Chief, Montel News:What's your view for on the JKM the Japan Korea marker and the TTF, the Dutch gas price the winter spread. What's your view there, Saul? Do you think you expect that to tighten or widen?
Saul Kavonic - Head of Energy Research, MST Financial:For this coming winter?
Richard Sverrisson - Editor-in-Chief, Montel News:Yeah.
Saul Kavonic - Head of Energy Research, MST Financial:Oh we are in winter, I guess already. It's just started, look, things should be able to be, again, dependent on a few factors, in particularly the severity of the winter. And obviously the geopolitical environment with Russia and Ukraine in particular. But it should be things look like they're reasonably under control, despite stocks aren't being, having been forced to the higher levels that were in the last few years. So if we get a very severe winter, and Henning tell me if you disagree with me, but I think we could see prices then being maintained in the teens. We're talking about, an upside is now in the teens which compared to the last two years is not really that high. And if we see a relatively weak or mild winter, that's gonna leave us with quite strong stock levels exiting winter ahead of new supply ramping up again out of the US, Qatar next year, which would be bode for, potentially prices dropping into singel digits potentially in the shoulder months of 2026.
Richard Sverrisson - Editor-in-Chief, Montel News:Any comments Henning there on what you would do you agree generally with Saul's outlook here for the coming months?
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group:So, we don't always agree on things, but I have a shocking agreement here. So we actually have a price range outlook. We try and avoid the term forecast, but it is what it is. But for 26, 27, where you would think, so the price flow is actually $7 per MMbtu which would sit in the middle of what Saul has just said. Now I have recently come across quite a few people who say no. Five is much more likely now because of so much US energy coming to market and that they've already sum most of their costs so that, rather than shutting in production, they just to continue to send to Europe. But there, there's two things in Europe that I think are worth considering that might change the the dynamics this winter. One is Germany. Their inventories are pretty low. They didn't fill up. They only they only went about 70 something percent at the start of winter. So if this is a cold and long winter, then Germany could, I wouldn't say it's a problem. They wouldn't run out of gas, but that would raise price because they'd have to go into the spot market to prevent inventories falling to, to pretty low levels, which they wanna avoid. And the rest, I guess we'll come into the minute, is what's gonna happen in Ukraine this winter. That's quite a crucial development that's really difficult to forecast.
Richard Sverrisson - Editor-in-Chief, Montel News:If we, stick with the Ukraine and there are ongoing talks at the moment the US, Europe and Russia and Ukraine obviously. What's the view from Eurasia here? How are, how likely is a peace deal, Henning?
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group:So a peace deal in the sense that it's credible and lasting, we think is very unlikely in the near term. In fact, right out towards middle of 2026. Our current house view is that there, there's even, it's even unlikely that a credible, stable ceasefire comes out of these talks. Now I have to caveat that things are moving quite fast. The three weeks ago suddenly the US initiative that was apparently part written by the Russians all out of seemingly nowhere, so at least the Ukrainians and the European Union didn't know about it and neither did the UK. Then that was written a little bit and put back to the Russians and they said no to it. So there's a lot of movement right now. There's talks this week ongoing between Steve Witkoff US envoy and the Russian government. So there's lots going on. But essentially what we're seeing here, what we think is. We're seeing in live politics, the lack of Venn diagram overlap. You remember what the US produced three weeks ago in collaboration with the Russians was totally unacceptable to Ukraine or, and for that matter also to the European Union and the UK. And then it was rewritten a little bit and then that was given over to the Russians and they said, absolutely unacceptable. And that tells you that both sides at this stage prefer fighting another winter. And this is why we don't really think there's a credible ceasefire coming out. It's possible that you suddenly see something like, okay, we're gonna live, we have a cessation of firing, which I guess wrong for ceasefire, but but that would be so unstable. You'd basically see both sides just stopping to shoot for a few days, re-arm, restructure, remove a little bit and then at a very high risk of either side trying to take advantage of the situation and just push ahead again. And so un unfortunately we are pretty sure that we're gonna have another winter of fighting in Ukraine.
Richard Sverrisson - Editor-in-Chief, Montel News:What's your view here Saul? Would you agree with Henning?
Saul Kavonic - Head of Energy Research, MST Financial:I would be very wary of disagreeing with Henning on this Henning's a almost expert on this topic, at least as a regards to energy. I think particularly because I'm starting to focus a bit more on the midterm than on the very short term. We've written an environment where with ESG and climate pressures really since 2020 through 2024, appetite to invest, big LNG projects and things has been diminished. That has really turned around this year. It's really, it's turned around in the last six to nine months. There's a lot more appetite to invest, there's a lot more bullishness on the overall outlook for oil and LNG at a global level. And what I think is very interesting is, let's assume. Let's just, let's look at a bearish scenario. Let's assume some kind of sustained cease for ir, perhaps like imposed by Trump is achieved at some point next year. And what does that mean? Does that mean that all of a sudden the Russian gas starts flooding back into Europe and we see an oversupply? Or more realistically, is Europe likely to still be very aware you're taking much more Russian gas and so actually the balances are left relatively unchanged. Particularly good considering like Trump's not really seems to be enforcing sanctions on Arctic two. So those volumes are coming back. Come what may, I think we need to look at a scenario it says even in that really bearish scenario, from a pricing perspective, it's not really such necessarily the biggest driver for gas prices over the next several years. The biggest driver is gonna be a lot about execution. And timeframes of the US projects and how they actually delivered on schedule, which I'm very skeptical of. And this demand side response and what I think is the most interesting thing. So in the last five years we've had two major black swan events for gas markets. We had COVID, and then we had the Ukraine War. And as a result in a market where ultimately there's particularly a lack of transparency on the demand side. We always used to, as analysts and forecasters, we're always like measuring our numbers relative to the year before. And the truth is we had such these two big shocks in the last five years. It's very hard to do so. Everyone's models now have a much higher margin of error, particularly on the demand side of what things look like. And if you recall three or four years ago, the long-term outlook for LNG prices into Asia was around the seven to $9 at MMbtu range, depending on the forecast. Now we're talking about a world where even in a large oversupply scenario, as Henning said, there's a forecast of $7 on annual average. So what used to be the big case is now the record oversupply floor case. And what does that mean for the mid case for LNG prices going forward. So consensus is still around nine to $10, but I think we could start to make a case that perhaps it's more like ten to $13. And the ramifications of that, both for energy prices but also for the viability of new LNG projects, I think is quite profound and is not being discussed enough these days. Keen to get your challenge on that, Henning. I'm hoping you disagree with me so we can have a debate.
Richard Sverrisson - Editor-in-Chief, Montel News:Yeah. Over to you, Henning. Especially on the demand side, what's the outlook for demand in Europe for gas?
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group:I'll try and disagree very politely. What could put this sort of pressure downward further. On the one side so if you start in Europe, the moment of the German plan that was announced earlier this year to build 20 gigs of gas fired power stations by 2030. Now we already, we, we always said that was a little bit over ambitious. We kinda said, nah, maybe they can do 12 to 13 gigs by 2030 now turns they're gonna do eight Gigawatt between 2028 and 2031, which will, I don't think they'll do much by 2028. So it's gonna be towards the tail end here. So on the demand function, Europe's biggest economy, Germany is not gonna add as much gas as we thought, just gas consumption as we just thought or they thought just a few months ago. And I think that's probably similar across Europe. If you take the other big gas consumers like Italy for instance, not much going on in terms of new consumption there unless you factor in an enormous economic revival, which we really don't think so. I'm often accused of optimism in the sense that I'm not catastrophically bearish about Europe, but I really can't build you a scenario of explosive industrial gas consumption in Germany or elsewhere in Europe at the moment. So I think that's a little bit that, that's gonna keep the market drag on prices. And then if you move over to Asia, there's obviously the two big ones. There's China and India. China I think is approaching a peak in fossil fuel imports. I think probably in oil has already happened. And now net natural gas is the next one. And that in particularly hits the LNG market for two reasons. That might be that the gas consumption overall remains high because therefore they're pushing a domestic production. They're building power of Siberia two now, and they will build it. So the pipeline to Russia and they're trying to cap LNG imports. At 50% of gas consumption of every Chinese utility. And that is for geopolitical reasons. The Chinese government is really worried that in case it comes to a sort of a showdown with the United States, that trade in the South China Sea is impeded. And then if you look at China's biggest LNG supplies over the past it was it has been the United States. It's not anymore, but it was the United States and true of its biggest allies, Australia, Qatar. They are really worried about that situation. And and then you're seeing the electrification that's going on. Which is now hitting the truck market. So the heavy goods vehicles where China has been using a lot of LNG in the past, but they're shifting to electric trucks really fast. And then India is so price sensitive. I talked to a major Indian import of gas ngo a few weeks ago, and he basically said, unless you can get an average LNG spot price of seven to$8, we're gonna wipe out LNG for power generation in India because we just can't afford it. It's too expensive. And then they're worried about geopolitical events like the war in Ukraine. 15 years ago fukushima in Japan or it just gets cold in China. There's all things that don't affect India. Shouldn't affect India, but they do. So they're really wary of it. If you put all that together I struggle to believe the LNG demand forecasts the bullish ones that are out there at the moment. And that in conclusion would be my my push back towards Saul.
Richard Sverrisson - Editor-in-Chief, Montel News:I think that was a very low key disagreement there Henning, but just one a question on before I got turned to Saul. I think with that eight gigawatts of gigawatts of German gas plants coming online by 20, between 20 and 28 and 31. These are not base load plants, are they? So there, there's, they're gonna be, they're gonna be peakers, they're gonna be balancing the grid, balancing the times and the are old favorite, the dunkelflaute period. So there, there's not gonna be that huge amount of demand coming from them as if they're running 24 7.
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group:Exactly. So yeah, even for the you are adding to the pushback here, so
Richard Sverrisson - Editor-in-Chief, Montel News:Yeah, sorry. Okay. Onto you. So I'm just interested you're welcome to push back on the pushback. But just before potentially you do that, I was interested in your comments on your doubts about all the US LNG coming online. What, why were you why are you a bit skeptical there?
Saul Kavonic - Head of Energy Research, MST Financial:So a big change. Really, particularly from this year and the new projects including recently Venture Globals called Kelsey Pass Two. And the projects that may take FID going forward is the EPC capacity of the LNG sectors now being largely exhausted. It's still decimated from the levels it was during the boom 10 to 15 years ago. You don't have anywhere near the capability and breadth of large contrasectors as you used to. And what you're seeing in the United States, unlike the previous two LNG waves, is US, L-N-G-E-P-C contractors are no longer willing to wrap on lump sum, turnkey their projects, right? And that is a very big change. And the reason they're not willing to do it's because it's too risky. And this was happening before Trump's tariff force. So this wasn't being driven by that. But certainly the tariffs had exacerbated that risk profile. And so what you are seeing now is when they announce a project, that's not guaranteed by Bechtel to be up and running in four years, it's now all the risks still ultimately is now lying with the operators. And it's not just your supply chain and labor cost environment, which is posing risks, but the whole structure of these EPC contracts is higher risk. And I would think you were much likely, more likely to see these projects now being delayed. If you look, it used to be, back in the heyday of LEGA decade ago, you had Bechtel and Gioda. Worley, JGC, Technique. All these companies were quite heavily involved in the EPC space. Now, Bechtel still tier one, but Shona really scale back and have some problems. For example, in Golden Pass. And even I think over Qatar I think is gonna be, six, nine month lates on, as things currently are, other teams like KBR JGC significantly downsized their teams and haven't really come back in the same way. Worley is now getting back into the market, which is a sign that they actually see that there's a shortage. And so I think these are all telltale signs that things are more likely to be difficult for the next wave of projects coming outta the US. And if that means. When you're getting this big ramp up in supply, right? If these things end up being, say on average six to 12 months late, that tightens your balances 20 to 30 million tons per annum over the next four to five years, which is, quite significant. And so I think that's, if we see that play out and we see emerging Asian economies, pick up demand. If LNG goes to $8 say so, then you could see another 20 to 30 million tons of demand response. All of a sudden, that oversupply of 50 million tons doesn't exist. You don't end up pushing out a lot of US LNG, and your annual average price could be seven to$8, even in a really weak year. And then everyone has to revisit what the ultimate cost and pricing structure for LNG is going forward. I think I'll just add lastly, is. Now I obviously like to focus on Australia because I'm from Australia. But Australia's been a very good kind of canary in the coal mine for energy transition around the world because we've had such rapid coal closures, high penetration of renewable, high volatility as a result. And what we see in Australia now is, the impact of AI and soften data centers. On electricity demand is pushing up electricity demand several hundred basis points over the next five years. It's already done at a couple hundred basis points, and when you have what's relatively quick increases in demand from a new sector like that, gas tends to pick up a lot of that slack. To the point that now the government has shifted here in a big way, realizing we need a lot more gas support, otherwise we've gotta be holding back our technology ambitions. And so if you start to apply that at a global level, which is a very apt thing to be doing, if you say electricity demand's gonna actually be 5% higher in 2030, just because of data center demands, what does that mean for your power mix? And a lot of that incremental is likely to be coming from gas or nuclear, if you have it. And that impact on LNGs actually can be quite significant. Just to provide that counterbalancing what's could be an upside pressure, which is again, not baked into the base case forecast at this point.
Richard Sverrisson - Editor-in-Chief, Montel News:Yeah that's fascinating stuff. Saul. I think just finally I'd like to talk, go back onto to Russia, Ukraine issues here. I think we still seeing moves to strongly, end Russian gas and Russian imports of energy by 2027. Despite some countries, some member states kicking back against that. What's your view here, Henning, do you think it's likely that 2027 will see the end of all Russian gas to Europe?
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group:Earlier this year I had still had the position that at some point when a ceasefire comes, for instance, pipeline supply from Russia via Ukraine into the landlord parts of the EU. Slovakian Hungary and particularly wood resume. I don't think that anymore. I'll get that in a moment. But then of course you've got the LNG sector where at the moment that is the policy that Europe wants to phase it all out. And we'll have to wait and see on that. I think that still will become part of negotiations, their low hanging fruit when things are negotiated between Russia, Ukraine, and the Europeans. And the Americans of course. That might become a play ball. But the volumes will be low. This Europe doesn't really need Russian gas at high volumes anymore. This is, it's three years ago that this all started. A lot has changed since then. And it's just the need for high volume gas imports from Russia is gone. On the pipeline side, I think it's when really important thing to. To keep in mind is Russia has over the last two months, taken out the entire power system of Ukraine. I actually don't think this has ever happened that a a nation's taken another sovereign race nation's entire power system, civilian system out so systematically. So they've taken out more than 40 coal, gas, fire, power stations. They've also taken out 60% of Russia Ukraine's Natural Gas production. Now the Ukrainians are making heroic efforts to repair this as they're being bombarded. But obviously that doesn't really work. So it's an emergency fixing measure and the gas production is near the front line, so it's being shot out all the time. So this means that the Ukrainian power and gas system will require imports. From the European Union over the next couple of years. Even if there was a ceasefire next winter or this winter, this would take a couple of years to fully repair because the damage is so extensive. And that means on the electricity side, they're gonna have to import gas power from Poland, from and from Central and Southeastern Europe. But on the gas side, LNG will have to be coming in. We already see saw one cargo coming into Greece and being put Northwood. And then there'll be more cargoes into the Lithuanian. Poland. The estimates that I heard when I was in Ukraine was that between four and six BCM between now and March will be needed and roughly 10 BCM per annum over the next three years, three to five years. And that goes a little bit towards Saul. What Saul was saying, this is an incremental increase in gas consumption that wasn't there just very recently. And then if things get cold or if the economy in Europe does do a little bit better. This is indeed important because you're just shifting everything a little bit further. And gas is a marginal commodity. So it does react really sensitively just to these moderate swings because all of this gas will have to be bought in the spot market and then you start fishing around where is it coming from, and so that, that could tighten things because especially the situation in Ukraine, it cannot be resolved easily. And last, will pipeline gas flow back from Russia to central Europe? We think not ,because what the Ukrainian officials would talk to us saying after this extensive systematic damage of Ukraine's civil energy infrastructure, you cannot reward Russia by allowing Russian gas back into the parts of European Union, there would being the most pro-Russian. So some officials said even if this was agreed overhead we just sabotage the lines so it wouldn't open allowed. So I think that, yeah,
Richard Sverrisson - Editor-in-Chief, Montel News:Absolutely. Thank you, Henning. I think that's very clear, but I think Montel was recently reported, so I know you're not an engineer, despite some countries clearly banning all Russian gas pipeline and LNG. LNG from Russia is still flowing into France, Belgium, and Spain and a recent Montel report highlighted the fact that there's highly likely that Russian gas being blended on the continent will flow to the UK is already flowing back into Germany. Is it possible to track the molecules of Russian gas versus other gas, or is this just something that we can expect to happen, especially in periods of tightness over the winter?
Saul Kavonic - Head of Energy Research, MST Financial:Richard, as it turns out, I am an engineer, but I'm, my friend doesn't actually help me answer this question. Any particular, oh, Chris,
Richard Sverrisson - Editor-in-Chief, Montel News:sorry. Sorry.
Saul Kavonic - Head of Energy Research, MST Financial:So look there's two things to that. So there there's limits into what you can ultimately track and trace, but you can do quite a lot more than is currently date being done. And that then comes to the second point, which is how much do you really wanna know? We're seeing a lot of Iranian barrels and Russian barrels on the market, which are not supposed to be. And it's well known the intermediate countries that they're going through. And people have been willing to turn a blind eye under the Trump administration, under the Biden administration. It's a question of will, I think more it, you could be weeding out a lot more if you wanted to. But that, it's a question of if they want to, and a lot of it comes back to, if we remember the reason Europe stopped taking Russian gas was not because Europe made a principle decision not to take Russian gas. It's because Russia turned the gas off. And I tend to agree with everything that Henning said, but I do worry that after some kind of ceasefire, if it lasts for a period of times and a few years passes and that cheap Russian gas is there and it's cheap. Will Germany say, oh, we'll take a little bit, we'll take a little bit more the year after and in 10 years time we have a, probably not to the same extent but before, but at least a degree of reliance on cheap Russian gas and history would suggest that, it's a pretty high likelihood of playing out over time because memories end up being short when there's a cheap option on the table. And I say that with a, it would be unfortunate if that happens, I think from a, particularly from a 20, 30 onwards perspective, if we just wanna look at this from a market balances perspective, that is, would be one of the downside risks. That's, again, not in a base case, but it would be a downside risk to prices. That's some more material russia flows come back into Europe.
Richard Sverrisson - Editor-in-Chief, Montel News:Gentlemen I feel we could talk for hours on this, but we have to put a stop to it now and time is running short. So once again a fascinating discussion and sure want to be continued in 2026. So thank you very much for joining the Plugged in podcast.
Henning Gloystein - Managing Director of Energy and Resources, Eurasia Group:Thanks a lot. Thanks Richard.
Saul Kavonic - Head of Energy Research, MST Financial:Thanks Richard.
Richard Sverrisson - Editor-in-Chief, Montel News:And new listeners, thanks for listening to this episode of Plugged In. If you enjoy this discussion, please like, rate and follow to make sure you get the latest podcast episodes as soon as we release them every Friday. We'd also love to read your reviews of the podcast. It helps us tick you up to date with what you, our listeners think of our podcast. And what content you want to receive more of. Finally, you can head to montelnews.com for more news and analysis from our team of journalists across Europe and beyond. See you next time.
