Reducing Europe’s gas demand the only way out of energy crisis, says Trafigura executive

By Nora Buli

OSLO (Reuters) – The only effective way for Europe to cope with its ongoing energy crisis is to reduce its demand for gas, a senior executive at top commodities trader Trafigura said on Wednesday.

Getting more liquefied natural gas (LNG) shipments and reducing power generation is helping, but it is not enough, according to Trafigura Chief Economist Saad Rahim.

“Even with all the demand measures and responses that we have taken, looking at the trajectory, if there are no Russian (gas) flows in particular next year … at the end of the day the solver has to be demand reduction,” he told Reuters.

His concern was whether European governments and authorities would intervene in the market to stop the process, he said.

“That is where the worry is a little: are we still allowing demand to remain where it is, or are we allowing market mechanisms to effect demand destruction?” he asked.

Earlier, Rahim told an energy conference that Europe would likely have enough gas for the rest of this year. The issue was next year, he said, and whether Europe would have enough gas in storage to cope with colder-than-expected conditions.

“The problem becomes 2023 …. Russian gas supply at these levels does present enormous weather risk. It’s really only warm weather that really keeps storage above record lows,” he said.

The expectation for a longer gas crunch was also increasingly reflected in the wholesale market, he told Reuters.

“Deferred prices for gas are starting to move back up. That’s telling you that the market is saying that the problem is still to come ahead of us.”

(Reporting by Nora Buli, writing by Gwladys Fouche, editing by Terje Solsvik)