According to a new report in Bloomberg citing an energy analyst at Credit Suisse, energy poverty in developing countries is being increased by the energy crisis in Europe, as the EU buys up all available stocks of liquid natural gas in an effort to stave off shortages over the winter.
Saul Kavonic, an energy analyst at Credit Suisse said, “Europe is sucking gas away from other countries whatever the cost.”
Analysts now believe Europe will survive the coming energy crisis despite the soaring costs of gas, electricity, and oil, after the continent has gone on an energy buying spree. However this has come at a high price for the developing world, which has seen Europe’s ravenous demand suck up all of the available energy and drive prices up beyond the reach of these poorer nations.
Now analysts are saying emerging market countries are at tremendous risk of not being able to meet their energy needs. It is expected to hit the economies of these countries most strongly, as factories are forced to shut down, jobs are cut, populations have to endure higher energy prices as well as longer and more frequent power outages, and social unrest due to reduced economic health of individuals and shortages of vital products cause even more problems for civil order.
Experts note that exporters in Qatar and the US have been accepting bids left and right from European buyers, who have bought up as much fuel as they can find as they have sought to fill their reserve storage capacities in preparation for the peak demand of winter. However that increase in demand has driven up prices, leaving developing countries like Pakistan, Thailand, and Bangladesh struggling to find fuel for their national needs, and unable to comfortably afford any fuel they can locate that is available for sale.
Dutch energy trader Vitol Group Chief Executive Officer Russell Hardy noted, “We are borrowing other people’s energy supplies. It’s not a great thing.”
Bloomberg noted that according to some traders, as prices have soared, suppliers to South Asia have simply canceled long-scheduled contracts for deliveries, and sought out more lucrative offers elsewhere in the current market, at current prices.
Raghav Mathur, an analyst at Wood Mackenzie said, “Suppliers don’t need to focus on securing their LNG to low affordability markets.” He added that the penalties they are paying for canceling the contracts are more than made up for by the increased profits they are seeing on the spot markets.
He added, “LNG will belong first to the ‘developed,’ with the leftovers for the ‘developing,’” and noted that dynamic will not be changing anytime soon,
