1 00:00:00,440 --> 00:00:03,400 Speaker 1: This is Dana Perkins, and you're listening to Switched On, 2 00:00:03,800 --> 00:00:07,560 Speaker 1: the podcast brought to you by BNF. Winter in the 3 00:00:07,600 --> 00:00:11,959 Speaker 1: Northern Hemisphere officially starts on December twenty first, but of course, colder, 4 00:00:12,000 --> 00:00:15,520 Speaker 1: wintry weather could arrive much sooner, and with it an 5 00:00:15,560 --> 00:00:19,520 Speaker 1: increased demand for natural gas for heating. In recent years, 6 00:00:19,560 --> 00:00:22,480 Speaker 1: we've been reminded that the global movement of natural gas 7 00:00:22,480 --> 00:00:27,200 Speaker 1: between countries is intimately connected to geopolitics. When Russia invaded 8 00:00:27,320 --> 00:00:30,840 Speaker 1: Ukraine nearly three years ago, sanctions imposed on Russia by 9 00:00:30,880 --> 00:00:34,520 Speaker 1: Western economies led to a dramatic drop in a historically 10 00:00:34,680 --> 00:00:38,559 Speaker 1: large source of European gas supply at that moment. The 11 00:00:38,680 --> 00:00:42,000 Speaker 1: US responded by ramping up flows from the Permian Basin, 12 00:00:42,240 --> 00:00:45,479 Speaker 1: shipping L and G to the European market, inspiring a 13 00:00:45,600 --> 00:00:49,640 Speaker 1: third wave of liquefied natural gas. While geopolitics has an 14 00:00:49,680 --> 00:00:53,360 Speaker 1: impact on supply, weather plays an equally important role in 15 00:00:53,400 --> 00:00:56,600 Speaker 1: defining demand. As we look ahead to winter in the 16 00:00:56,600 --> 00:01:00,360 Speaker 1: Northern Hemisphere in Europe. More specifically, figuring out just how 17 00:01:00,400 --> 00:01:04,000 Speaker 1: much gas Europe may need is heavily influenced by just 18 00:01:04,040 --> 00:01:07,039 Speaker 1: how cold it might get here. At BNF, we have 19 00:01:07,120 --> 00:01:10,800 Speaker 1: our own in house meteorologists working side by side with 20 00:01:10,880 --> 00:01:14,040 Speaker 1: our Gas team to model the world's changing weather patterns 21 00:01:14,200 --> 00:01:18,520 Speaker 1: and forecast seasonal gas demand. Today I'm joined by Jess Hicks, 22 00:01:18,760 --> 00:01:24,119 Speaker 1: BNF's meteorologist covering European weather, and a lamp Matte Dorao, 23 00:01:24,480 --> 00:01:28,240 Speaker 1: a senior associate from the Gas team. On today's show, 24 00:01:28,280 --> 00:01:30,840 Speaker 1: they discuss some of the topics found in the research 25 00:01:30,920 --> 00:01:34,920 Speaker 1: note titled European Gas Winter Outlook twenty twenty five to 26 00:01:34,959 --> 00:01:38,840 Speaker 1: twenty twenty six Final Crunch. BNF's clients can find this 27 00:01:39,000 --> 00:01:42,039 Speaker 1: note and other gas and weather research by going to 28 00:01:42,120 --> 00:01:45,399 Speaker 1: BNF go on their Bloomberg terminal, or by logging in 29 00:01:45,440 --> 00:01:48,440 Speaker 1: to BNF dot com. To find out more about how 30 00:01:48,480 --> 00:01:53,480 Speaker 1: BNF approaches strategy research on the energy transition, including commodity markets, 31 00:01:53,680 --> 00:01:56,600 Speaker 1: or how it's playing out in different sectors, or perhaps 32 00:01:56,640 --> 00:01:59,600 Speaker 1: the cross cutting technologies that have the potential to change 33 00:01:59,600 --> 00:02:03,160 Speaker 1: the future. Head to banef dot com. If you'd like 34 00:02:03,200 --> 00:02:05,360 Speaker 1: to speak with a member of our team about becoming 35 00:02:05,360 --> 00:02:09,040 Speaker 1: a client, email us at Sales dot BNF at Bloomberg 36 00:02:09,080 --> 00:02:12,080 Speaker 1: dot net. Okay, let's talk about the winter ahead for 37 00:02:12,160 --> 00:02:19,800 Speaker 1: Europe and what this means for natural gas. 38 00:02:25,280 --> 00:02:26,680 Speaker 2: Jess, thank you, for joining today. 39 00:02:26,840 --> 00:02:28,400 Speaker 3: Thanks Stana, glad to be here. 40 00:02:28,400 --> 00:02:31,040 Speaker 2: And oh well, good to have you on as well. Yeah, 41 00:02:31,080 --> 00:02:33,200 Speaker 2: thank you. It's my first time I'm with pod. Very excited, 42 00:02:33,560 --> 00:02:37,400 Speaker 2: well long overdue, because you're doing some critical thinking about 43 00:02:37,400 --> 00:02:40,799 Speaker 2: some of our most popular research, which is the winter 44 00:02:41,080 --> 00:02:43,400 Speaker 2: and summer gas outlooks, and we're going to talk a 45 00:02:43,440 --> 00:02:45,919 Speaker 2: bit about both of those today. But as we think 46 00:02:45,960 --> 00:02:48,680 Speaker 2: about the work that you're doing on looking at what 47 00:02:48,880 --> 00:02:51,639 Speaker 2: the you know, six months ahead, year ahead is to 48 00:02:51,760 --> 00:02:54,480 Speaker 2: the gas market, one of the critical inputs for that 49 00:02:54,680 --> 00:02:58,040 Speaker 2: is weather. You know, a cold winter means more gas consumption. 50 00:02:58,320 --> 00:03:01,119 Speaker 2: But how big of a fact is it? How much 51 00:03:01,200 --> 00:03:06,480 Speaker 2: does weather influence your work? It's a fundamental factor in 52 00:03:06,520 --> 00:03:09,880 Speaker 2: our forecast, absolutely, especially for the winter season. Much of 53 00:03:09,919 --> 00:03:10,840 Speaker 2: Europe's gas. 54 00:03:10,600 --> 00:03:13,160 Speaker 4: Dement comes from heathing, right, the gas that we use 55 00:03:13,200 --> 00:03:17,560 Speaker 4: at our house, either for like water heating or space heating, 56 00:03:17,919 --> 00:03:20,440 Speaker 4: and the cooler gas, the more of it we need 57 00:03:20,480 --> 00:03:23,440 Speaker 4: and we burn. So to give you an example, if 58 00:03:23,480 --> 00:03:26,919 Speaker 4: we take for the coming winter the coldest winter weather 59 00:03:27,000 --> 00:03:29,880 Speaker 4: in the past thirty years, we might see gas storage 60 00:03:29,919 --> 00:03:32,440 Speaker 4: in Europe theoretically go down to zero by the end 61 00:03:32,480 --> 00:03:34,840 Speaker 4: of the winter. That's how much impact weather. 62 00:03:35,240 --> 00:03:37,040 Speaker 2: Storage goes down to zero, is there a chance that 63 00:03:37,080 --> 00:03:38,320 Speaker 2: we actually run out of gas? 64 00:03:38,360 --> 00:03:38,760 Speaker 3: It won't. 65 00:03:38,840 --> 00:03:41,440 Speaker 4: It won't happen because we'll try to snap up some 66 00:03:41,880 --> 00:03:46,120 Speaker 4: liquefied natural gas cargoes before that happens, some kind of 67 00:03:46,120 --> 00:03:49,560 Speaker 4: emergency supply. But theoretically it could come down to that. 68 00:03:49,840 --> 00:03:52,280 Speaker 2: Okay, So weather is one of the top well we'll 69 00:03:52,320 --> 00:03:55,200 Speaker 2: say top three, or maybe even the top factor that 70 00:03:55,240 --> 00:03:57,480 Speaker 2: you think about when in particular, looking at the winter 71 00:03:57,560 --> 00:03:58,880 Speaker 2: gas outlook, I would. 72 00:03:58,680 --> 00:04:03,480 Speaker 4: Say so, yes, it's definitely the top three, alongside renewables uptake. 73 00:04:03,880 --> 00:04:08,280 Speaker 4: But this is still something that's more I guess predictable 74 00:04:08,400 --> 00:04:12,000 Speaker 4: in a sense. The capacity for solar energy or wind 75 00:04:12,120 --> 00:04:14,240 Speaker 4: energy is not going to appear out of thin air. 76 00:04:14,400 --> 00:04:17,400 Speaker 4: But the weather is very very unpredictable. Well, maybe Jess 77 00:04:17,440 --> 00:04:20,280 Speaker 4: can predict it. Yeah, I mean yes, so predicting the unpredictable. 78 00:04:20,360 --> 00:04:23,880 Speaker 4: So then let's get to this important factor that we 79 00:04:23,920 --> 00:04:27,640 Speaker 4: are trying to really think about within a degree of probability, 80 00:04:27,640 --> 00:04:30,679 Speaker 4: hence the science behind the weather. What sort of winter 81 00:04:31,000 --> 00:04:33,599 Speaker 4: do you think that we are in for and what 82 00:04:33,760 --> 00:04:36,720 Speaker 4: leads you to that scientific kind of probability. 83 00:04:37,000 --> 00:04:39,400 Speaker 3: It's always a tough one when someone asked me what 84 00:04:39,520 --> 00:04:42,640 Speaker 3: I expect the weather will be in six months time 85 00:04:42,760 --> 00:04:45,480 Speaker 3: or four months time, because I try to do two 86 00:04:45,520 --> 00:04:48,920 Speaker 3: week forecasts and they're often wrong. But that's just the 87 00:04:49,000 --> 00:04:50,719 Speaker 3: name of the game in the weather world. So what 88 00:04:50,800 --> 00:04:54,280 Speaker 3: we can look at to get an understanding of how 89 00:04:54,320 --> 00:04:57,680 Speaker 3: the weather might operate is we can start to look 90 00:04:57,839 --> 00:05:02,279 Speaker 3: at specific atmospheric pattern and so what I've been looking at, 91 00:05:02,320 --> 00:05:06,640 Speaker 3: and I follow many reputable meteorologists around the world, and 92 00:05:06,640 --> 00:05:09,920 Speaker 3: what these individuals are also seeing in certain weather models 93 00:05:09,920 --> 00:05:13,799 Speaker 3: and certain climate models are specific signals that are pointing 94 00:05:13,880 --> 00:05:16,360 Speaker 3: us in the direction of a very cold winter in 95 00:05:16,400 --> 00:05:20,560 Speaker 3: the northern hemisphere. And so how I process this, I 96 00:05:21,200 --> 00:05:25,720 Speaker 3: take every bit of information, I understand what people are saying, 97 00:05:25,960 --> 00:05:29,719 Speaker 3: and give myself a percentage of what I expect the 98 00:05:29,760 --> 00:05:32,279 Speaker 3: winter will be. So, for example, this year, I put 99 00:05:32,320 --> 00:05:34,560 Speaker 3: the odds of a harsh winter around seventy percent, and 100 00:05:34,600 --> 00:05:37,479 Speaker 3: that's just based on three key climate signals that I've 101 00:05:37,480 --> 00:05:41,000 Speaker 3: been monitoring over the past few months. One aspect to 102 00:05:41,080 --> 00:05:44,599 Speaker 3: look into or consider for a harsh winter would be 103 00:05:44,600 --> 00:05:47,200 Speaker 3: something called sudden stratosphere warming. So this is where the 104 00:05:47,200 --> 00:05:50,120 Speaker 3: stratosphere rapidly warms over a matter of a few days, 105 00:05:50,200 --> 00:05:53,640 Speaker 3: and what happens is it weakens something called the polar vortex, 106 00:05:53,680 --> 00:05:56,840 Speaker 3: which keep cold Arctic air at the top of the globe. 107 00:05:56,880 --> 00:06:01,120 Speaker 3: And so what happens is this usually tight circuit slows 108 00:06:01,440 --> 00:06:04,880 Speaker 3: and lobes of this cold air will come down and 109 00:06:04,960 --> 00:06:09,599 Speaker 3: hit multiple points on the northern hemisphere, so North America, Europe, Russia. 110 00:06:09,720 --> 00:06:12,160 Speaker 3: And when this happens, this is where we can start 111 00:06:12,160 --> 00:06:14,599 Speaker 3: to see cold air outbreaks and an uptake and gas 112 00:06:14,600 --> 00:06:16,719 Speaker 3: demand in which what I'm trying to look for is 113 00:06:16,720 --> 00:06:19,560 Speaker 3: signals for this. So what are those key climate signals. 114 00:06:19,760 --> 00:06:21,880 Speaker 3: I think some of these might be familiar for some 115 00:06:21,960 --> 00:06:24,080 Speaker 3: of our listeners, but I'm going to spell them out 116 00:06:24,160 --> 00:06:27,559 Speaker 3: for those who are unfamiliar. One key signal is ENZO, 117 00:06:27,680 --> 00:06:30,680 Speaker 3: the El Nino Southern oscillation. So this is a natural 118 00:06:30,720 --> 00:06:33,880 Speaker 3: cycle along the equator in the Pacific Ocean. It's a 119 00:06:33,920 --> 00:06:38,160 Speaker 3: cycle of warmer or cooler temperatures that influence global weather trends. 120 00:06:38,240 --> 00:06:41,760 Speaker 3: And so when Enzo is in the La Nina phase, 121 00:06:41,960 --> 00:06:45,400 Speaker 3: which we're currently entering into again, this has the potential 122 00:06:45,400 --> 00:06:47,720 Speaker 3: to increase the risk of cold air outbreaks in Europe, 123 00:06:47,760 --> 00:06:52,680 Speaker 3: and a lot of meteorologists debate this. Enzo specifically doesn't 124 00:06:52,720 --> 00:06:55,440 Speaker 3: have that big of an impact in Europe itself, but 125 00:06:55,920 --> 00:06:58,640 Speaker 3: more recently than not, we are seeing a trend of 126 00:06:58,680 --> 00:07:01,520 Speaker 3: these cold air outbreaks. When La Nina hits, we have 127 00:07:01,720 --> 00:07:05,480 Speaker 3: this influence happening moving into winter twenty twenty five, twenty six. 128 00:07:05,720 --> 00:07:08,160 Speaker 3: But the next key climate signal that I've looked into 129 00:07:08,560 --> 00:07:12,120 Speaker 3: is something called the QBO quasi biennial oscillation. So that's 130 00:07:12,240 --> 00:07:15,560 Speaker 3: just a fancy term for shifting wind patterns in the 131 00:07:15,560 --> 00:07:19,600 Speaker 3: stratosphere around the equator. And right now the QBO is 132 00:07:19,800 --> 00:07:22,760 Speaker 3: in its negative phase, and what that means is that 133 00:07:23,400 --> 00:07:27,280 Speaker 3: hilts our odds in favor of sudden stratospheric warming events 134 00:07:27,320 --> 00:07:30,840 Speaker 3: in winter. And the third and final climate signal that 135 00:07:30,880 --> 00:07:34,360 Speaker 3: I've focused on is looking at Arctic sea ice. What 136 00:07:34,400 --> 00:07:36,679 Speaker 3: we've seen is that in the barns and car seas 137 00:07:36,960 --> 00:07:40,960 Speaker 3: we've actually recorded almost record low ice coverage. What we 138 00:07:41,000 --> 00:07:44,040 Speaker 3: can see are the odds of a sudden stratospheric warming 139 00:07:44,040 --> 00:07:48,040 Speaker 3: event increasing, and so Arctic air will then spill into 140 00:07:48,280 --> 00:07:51,600 Speaker 3: the northern hemisphere again increasing gas demand. And so if 141 00:07:51,600 --> 00:07:54,480 Speaker 3: we pull all this together, the La Nina, the negative QBO, 142 00:07:55,080 --> 00:07:57,080 Speaker 3: the low sea ice, and the barons and car seas 143 00:07:57,400 --> 00:08:00,880 Speaker 3: this is stacking the deck towards at least one sudden 144 00:08:00,920 --> 00:08:04,600 Speaker 3: stratospheric warming event this winter, and so that will lead 145 00:08:04,640 --> 00:08:07,360 Speaker 3: me to believe that's seventy percent chance of a harsh winter. 146 00:08:07,760 --> 00:08:10,520 Speaker 2: There was one that you actually downplayed in here, which 147 00:08:10,560 --> 00:08:14,240 Speaker 2: is the Lenino el Nino effect, and I'm particularly fixated 148 00:08:14,280 --> 00:08:16,400 Speaker 2: on it because I grew up in northern California, where 149 00:08:16,400 --> 00:08:19,240 Speaker 2: we talked about El Nino La Nina a lot, mostly 150 00:08:19,280 --> 00:08:21,520 Speaker 2: because of the rain, and because those of us in 151 00:08:21,520 --> 00:08:24,840 Speaker 2: California play sports outdoors when you're a child, so it 152 00:08:24,880 --> 00:08:28,360 Speaker 2: has a daily effect on you during those winters. But 153 00:08:28,440 --> 00:08:30,880 Speaker 2: we've been doing this podcast for about five years and 154 00:08:31,120 --> 00:08:35,760 Speaker 2: that effect has come up repeatedly in this show. So 155 00:08:36,040 --> 00:08:38,760 Speaker 2: I want to know, is are you seeing an increase 156 00:08:39,000 --> 00:08:42,000 Speaker 2: in that flipping and that frequency of that being a 157 00:08:42,040 --> 00:08:44,839 Speaker 2: factor that you look at. Because my understanding was this 158 00:08:44,880 --> 00:08:47,280 Speaker 2: is something that was, you know, while it is a 159 00:08:47,360 --> 00:08:50,360 Speaker 2: natural occurrence, while there is a rotation to it, it 160 00:08:50,400 --> 00:08:53,880 Speaker 2: felt much further apart and I'm seeing it feature much 161 00:08:53,920 --> 00:08:57,840 Speaker 2: more often on this show. So taking my individual heuristic 162 00:08:57,920 --> 00:09:00,600 Speaker 2: experience and turning it into something that is actually something 163 00:09:00,600 --> 00:09:03,280 Speaker 2: a meteorologists could think about, are we seeing any sort 164 00:09:03,280 --> 00:09:05,319 Speaker 2: of increase in frequency of this effect. 165 00:09:05,520 --> 00:09:08,400 Speaker 3: It's actually a brilliant question. I think what's happening here 166 00:09:08,559 --> 00:09:11,840 Speaker 3: is that it's in the news more often, okay, but 167 00:09:12,000 --> 00:09:15,200 Speaker 3: also once you hear it once or twice, you start 168 00:09:15,200 --> 00:09:17,680 Speaker 3: to see it a lot more. And so La Nina, 169 00:09:17,720 --> 00:09:21,920 Speaker 3: el Nino, Enzo, the umbrella of Enzo has always been there. 170 00:09:22,040 --> 00:09:25,800 Speaker 3: There's always been a natural flipping. I think some meteorologists 171 00:09:25,840 --> 00:09:28,760 Speaker 3: and climatologists at the moment are looking into seeing how 172 00:09:28,800 --> 00:09:32,280 Speaker 3: it's changed over time. I haven't personally looked into that research, 173 00:09:32,520 --> 00:09:38,360 Speaker 3: but from my understanding of Enzo, it's just the natural cycle. 174 00:09:38,480 --> 00:09:41,000 Speaker 3: So we'll get a period of up to three years 175 00:09:41,160 --> 00:09:44,800 Speaker 3: of El Nino and then flips into a neutral phase 176 00:09:44,840 --> 00:09:46,720 Speaker 3: and then into La Nina for a year, and it 177 00:09:46,800 --> 00:09:49,640 Speaker 3: might stay in La Nina after that. So it's just 178 00:09:50,080 --> 00:09:54,240 Speaker 3: how the water is turning in the Equatorial Pacific. 179 00:09:54,559 --> 00:09:56,360 Speaker 2: It may or may not be changing, and I guess 180 00:09:56,360 --> 00:09:57,040 Speaker 2: time will tell. 181 00:09:57,200 --> 00:09:59,240 Speaker 3: Well, actually, it may be in the news a lot 182 00:09:59,240 --> 00:10:01,960 Speaker 3: more and we may see more headlines on it because 183 00:10:02,240 --> 00:10:05,480 Speaker 3: the warming atmosphere is actually amplifying the effects of El 184 00:10:05,559 --> 00:10:08,360 Speaker 3: Ninon and La Ninia in certain areas. I think Almino 185 00:10:08,800 --> 00:10:12,880 Speaker 3: is the phase that is most publicized because you can 186 00:10:12,920 --> 00:10:17,880 Speaker 3: see disastrous flooding, disastrous draughts all around the world because 187 00:10:18,240 --> 00:10:22,439 Speaker 3: of Elmino, and with warming temperatures, you have a much 188 00:10:22,559 --> 00:10:25,480 Speaker 3: higher amount of water vapor in the atmosphere, so you 189 00:10:25,559 --> 00:10:28,880 Speaker 3: have much higher potential for these extreme rainfall events to happen. 190 00:10:29,240 --> 00:10:33,240 Speaker 2: So this just further highlights that some of these factors 191 00:10:33,360 --> 00:10:35,920 Speaker 2: may be increasing in terms of their relevance, and it 192 00:10:35,960 --> 00:10:38,959 Speaker 2: really comes down to trying to weigh that up as 193 00:10:38,960 --> 00:10:41,080 Speaker 2: a meteorologists and figure out how important it will be 194 00:10:41,160 --> 00:10:43,040 Speaker 2: in this mix of all of the different sigles that 195 00:10:43,080 --> 00:10:45,560 Speaker 2: you've been looking for to think about what might happen 196 00:10:45,600 --> 00:10:47,960 Speaker 2: for us in the year head. Let's pivot then to 197 00:10:48,320 --> 00:10:51,240 Speaker 2: what this information then tells us. I'm feeling pretty certain 198 00:10:51,320 --> 00:10:53,680 Speaker 2: at this point that many gas traders are actually quite 199 00:10:53,679 --> 00:10:55,960 Speaker 2: close friends with meteorologists, and that they spend a good 200 00:10:56,000 --> 00:10:58,960 Speaker 2: amount of time together. We've established that we are expecting 201 00:10:59,080 --> 00:11:03,880 Speaker 2: a higher usual probability for cold winter, and we also 202 00:11:03,960 --> 00:11:06,760 Speaker 2: have geopolitical forces at play. So what I'm referring to 203 00:11:06,880 --> 00:11:11,000 Speaker 2: specifically is the continued war in Ukraine and then resulting 204 00:11:11,040 --> 00:11:15,800 Speaker 2: sanctions against Russian gas imports to Europe that do continue 205 00:11:15,800 --> 00:11:17,440 Speaker 2: to be holding, at least as of the time of 206 00:11:17,480 --> 00:11:21,200 Speaker 2: this recording. So when countries in Europe are thinking about 207 00:11:21,320 --> 00:11:24,760 Speaker 2: headed into this winter gas storage, you know, all signs 208 00:11:24,760 --> 00:11:28,760 Speaker 2: would point to in higher than usual gas storage, but 209 00:11:28,800 --> 00:11:31,640 Speaker 2: we're not at one hundred percent. So talk to us 210 00:11:31,679 --> 00:11:34,200 Speaker 2: a little bit about where we are in terms of 211 00:11:34,240 --> 00:11:38,600 Speaker 2: storage and what might be impacting not being at one 212 00:11:38,640 --> 00:11:41,040 Speaker 2: hundred percent, you know, because in my mind I'm thinking 213 00:11:41,080 --> 00:11:45,160 Speaker 2: conservatively that's where I would anticipate things kind of went to. 214 00:11:45,200 --> 00:11:47,600 Speaker 2: And in the recent past we have seen really high 215 00:11:47,760 --> 00:11:50,360 Speaker 2: levels of gas storage headed into winter. So where are 216 00:11:50,360 --> 00:11:52,480 Speaker 2: we now and why do you think that that is 217 00:11:52,520 --> 00:11:55,120 Speaker 2: the number that we are at here in October? 218 00:11:55,360 --> 00:11:58,000 Speaker 4: Yes, you're absolutely right. So after your versua as an 219 00:11:58,000 --> 00:12:01,360 Speaker 4: invasion of Ukraine, European Union as a whole kind of 220 00:12:01,400 --> 00:12:04,959 Speaker 4: came together and established that we needed to replenish stock 221 00:12:05,000 --> 00:12:08,440 Speaker 4: piles of gas much more conservatively, and we went up 222 00:12:08,480 --> 00:12:11,280 Speaker 4: to almost ninety five percent. At the beginning of winter 223 00:12:11,559 --> 00:12:14,559 Speaker 4: twenty twenty three, twenty twenty two, we had very very 224 00:12:14,640 --> 00:12:18,760 Speaker 4: high levels of storage, and now this summer has played 225 00:12:18,800 --> 00:12:21,680 Speaker 4: out a little differently. The reason for that is we 226 00:12:21,920 --> 00:12:26,719 Speaker 4: finished last winter on relatively lower levels of storage than 227 00:12:26,720 --> 00:12:29,800 Speaker 4: in previous years. The weather was actually pretty close to 228 00:12:29,840 --> 00:12:31,920 Speaker 4: the average. I think that Jess can elaborate on that 229 00:12:32,000 --> 00:12:35,280 Speaker 4: later on. But what really really dent did us stockpiles 230 00:12:35,360 --> 00:12:37,920 Speaker 4: during last winter was that we didn't have much wind, 231 00:12:38,120 --> 00:12:41,000 Speaker 4: and so since European countries are relying more and more 232 00:12:41,040 --> 00:12:44,640 Speaker 4: on wind power generation in their systems, if certainly you 233 00:12:44,679 --> 00:12:46,960 Speaker 4: don't have any wind, you're going to burn much more 234 00:12:47,000 --> 00:12:50,199 Speaker 4: gas to compensate for that. And the European countries did 235 00:12:50,240 --> 00:12:54,280 Speaker 4: the best to refeel storage during the summer season, but 236 00:12:54,320 --> 00:12:57,280 Speaker 4: we're not really quite up to the target levels. So 237 00:12:57,440 --> 00:13:00,640 Speaker 4: to give you an idea, the targeted level of stockpiling 238 00:13:00,800 --> 00:13:02,120 Speaker 4: was ninety percent. 239 00:13:02,160 --> 00:13:04,120 Speaker 2: And this target was set by the European Union. 240 00:13:04,320 --> 00:13:06,920 Speaker 4: Correct it was set by the European Commission and enforced 241 00:13:07,040 --> 00:13:10,280 Speaker 4: the country level, but with no real penalty, to be fair, 242 00:13:10,440 --> 00:13:13,880 Speaker 4: so it's been more less respected because we're still within 243 00:13:14,000 --> 00:13:17,880 Speaker 4: the allowed deviation range. We haven't hit ninety percent, but 244 00:13:18,240 --> 00:13:21,440 Speaker 4: in the past few weeks we've crossed eighty percent refill 245 00:13:21,559 --> 00:13:24,120 Speaker 4: at the Union level, which is within the ten percent 246 00:13:24,160 --> 00:13:27,079 Speaker 4: deviation range that was allowed by the Union. So I'd 247 00:13:27,120 --> 00:13:30,560 Speaker 4: say were kind of out of the woods in that sense, 248 00:13:30,600 --> 00:13:34,320 Speaker 4: we don't have particularly low starch. And one very important 249 00:13:34,320 --> 00:13:37,400 Speaker 4: factor is that we're going to see a lot more 250 00:13:37,720 --> 00:13:42,120 Speaker 4: liquefied natural gas coming online on the market this winter. 251 00:13:42,480 --> 00:13:46,120 Speaker 4: Basically Europe has been leaning on imports of this I guess, 252 00:13:46,480 --> 00:13:49,720 Speaker 4: very very cold liquefied version of natural gas that can 253 00:13:49,760 --> 00:13:53,240 Speaker 4: be carried on ships once the Russian tap kind of 254 00:13:53,280 --> 00:13:53,760 Speaker 4: dried out. 255 00:13:54,280 --> 00:13:58,640 Speaker 2: Okay, so we'll come to where that extra LNG is 256 00:13:58,640 --> 00:14:01,040 Speaker 2: going to come from and when we can flex that muscle. 257 00:14:01,080 --> 00:14:04,959 Speaker 2: But before we do, we're headed to a particularly cold winter. Potentially, 258 00:14:05,280 --> 00:14:08,880 Speaker 2: how about windy Is that going to be that factor 259 00:14:08,880 --> 00:14:12,560 Speaker 2: that may make up for that under supply from storage? 260 00:14:12,679 --> 00:14:17,200 Speaker 3: Absolutely so this year, unlike last winter which we saw 261 00:14:17,440 --> 00:14:20,400 Speaker 3: record low winds, this winter, I do expect us to 262 00:14:20,480 --> 00:14:25,320 Speaker 3: have a gusty, rainy winter for Northwest Europe, and so 263 00:14:25,640 --> 00:14:29,200 Speaker 3: I think there are a few factors in favor of 264 00:14:29,240 --> 00:14:32,480 Speaker 3: bringing the jet stream up and pushing a lot of 265 00:14:32,480 --> 00:14:35,880 Speaker 3: those winter storms into Northwest Europe, bringing the rain, bringing 266 00:14:35,920 --> 00:14:38,600 Speaker 3: the wind. But with that comes cloud cover, which isn't 267 00:14:38,640 --> 00:14:41,920 Speaker 3: as important in the renewables scene in winter as there's 268 00:14:42,240 --> 00:14:45,560 Speaker 3: low solar potential anyway, But this will help us going 269 00:14:45,600 --> 00:14:48,800 Speaker 3: into winter twenty five twenty six, and Al, I have 270 00:14:48,840 --> 00:14:51,800 Speaker 3: a very interesting data point when you were talking about 271 00:14:51,840 --> 00:14:55,040 Speaker 3: the low wind last winter. So in February of this year, 272 00:14:55,120 --> 00:14:57,560 Speaker 3: twenty twenty five, I was looking at the data and 273 00:14:57,920 --> 00:15:02,120 Speaker 3: in Germany, our top wind, we saw wind speeds drop 274 00:15:02,320 --> 00:15:05,000 Speaker 3: thirty six percent compared to twenty twenty four, and so 275 00:15:05,400 --> 00:15:09,360 Speaker 3: win generation then slumped by forty seven percent year on year, 276 00:15:09,520 --> 00:15:12,040 Speaker 3: and we saw spike and gas by fifty one percent 277 00:15:12,120 --> 00:15:13,920 Speaker 3: year on year. And so you can see you just 278 00:15:13,960 --> 00:15:17,320 Speaker 3: with those data points the connection we'recial and how fragile 279 00:15:17,560 --> 00:15:22,800 Speaker 3: maybe the renewable sector is to weather shifts. And so 280 00:15:22,920 --> 00:15:26,200 Speaker 3: hopefully this year round will see much better potential. Even 281 00:15:26,200 --> 00:15:28,720 Speaker 3: if it is a colder winter, maybe renewables will step 282 00:15:28,720 --> 00:15:29,440 Speaker 3: into fill the gap. 283 00:15:29,720 --> 00:15:32,000 Speaker 2: So we may have the ability for wind to dial 284 00:15:32,080 --> 00:15:35,120 Speaker 2: up this winter. But let's say that we don't. Let's 285 00:15:35,160 --> 00:15:37,880 Speaker 2: say it is both cold and flat in the air. 286 00:15:38,200 --> 00:15:42,040 Speaker 2: What does that then mean for LNG consumption? Because a 287 00:15:42,080 --> 00:15:45,160 Speaker 2: lump you had reference that there is more LNG potentially 288 00:15:45,200 --> 00:15:47,440 Speaker 2: coming online, Where is it coming from? Why is it 289 00:15:47,480 --> 00:15:49,880 Speaker 2: coming online? And then invariably we've got to get to 290 00:15:49,960 --> 00:15:50,480 Speaker 2: what does this mean? 291 00:15:50,520 --> 00:15:53,800 Speaker 4: For prices, yes, absolutely, So to give you a little 292 00:15:53,840 --> 00:15:57,160 Speaker 4: rundown of the numbers, Detiko funded reguest supply I was 293 00:15:57,200 --> 00:15:58,640 Speaker 4: talking about this winter. 294 00:15:58,680 --> 00:16:02,200 Speaker 2: Is going to base tically increase by almost ten percent 295 00:16:02,680 --> 00:16:05,480 Speaker 2: on here. That's a huge number, and Europe is going 296 00:16:05,560 --> 00:16:08,680 Speaker 2: to absorb a lot of that increase in supply actually, 297 00:16:08,960 --> 00:16:12,040 Speaker 2: and when you look at where that supply is coming from, 298 00:16:12,360 --> 00:16:15,800 Speaker 2: a lot of it is actually originating from new projects 299 00:16:15,880 --> 00:16:19,360 Speaker 2: located in the US, specifically the US golf Coast, so 300 00:16:19,600 --> 00:16:22,840 Speaker 2: basically traveling across the Atlantic and delivering to Europe because 301 00:16:23,000 --> 00:16:26,120 Speaker 2: it's a much shorter journey than going to Asia. In 302 00:16:26,200 --> 00:16:29,760 Speaker 2: as such, the arbitrage for deliveries to Europe tends to 303 00:16:30,000 --> 00:16:33,120 Speaker 2: play in favor of Europe versus Asia. And that's why 304 00:16:33,400 --> 00:16:37,080 Speaker 2: I'm not afly concerned over the security of supply for 305 00:16:37,240 --> 00:16:39,680 Speaker 2: Europe this winter. In fact, we think that there might 306 00:16:39,760 --> 00:16:42,480 Speaker 2: be a surplus of energy on the market and that 307 00:16:42,640 --> 00:16:45,480 Speaker 2: some of that flexible supply will actually struggle to find 308 00:16:45,520 --> 00:16:48,000 Speaker 2: a home, maybe not at the beginning of the winter, 309 00:16:48,280 --> 00:16:51,000 Speaker 2: but by the end of the winter and moving into summer. 310 00:16:51,120 --> 00:16:53,640 Speaker 2: It's going to become a real puzzle, I think. But 311 00:16:53,720 --> 00:16:56,320 Speaker 2: there are already discussions about energy prices in the northern 312 00:16:56,400 --> 00:16:59,800 Speaker 2: Hemisphere being particularly high this winter, very much revolving around 313 00:17:00,120 --> 00:17:03,840 Speaker 2: this cold weather pattern that we are expecting to see. 314 00:17:04,160 --> 00:17:06,359 Speaker 2: If there is a plot of supply of LNG on 315 00:17:06,400 --> 00:17:08,800 Speaker 2: the market, will prices go down or will that then 316 00:17:08,920 --> 00:17:11,000 Speaker 2: be met by a lot of what we've been talking 317 00:17:11,040 --> 00:17:13,440 Speaker 2: about here at BNAF among our research teams, which is 318 00:17:13,760 --> 00:17:16,239 Speaker 2: just this increase in demand. And you know, we did 319 00:17:16,280 --> 00:17:19,399 Speaker 2: a recent show that was actually a recording from our 320 00:17:19,920 --> 00:17:22,800 Speaker 2: summit in Houston, and they talked a lot about this 321 00:17:23,400 --> 00:17:26,480 Speaker 2: demand side, in particular coming from data centers, but we 322 00:17:26,600 --> 00:17:28,560 Speaker 2: also know that a huge percentage of that is the 323 00:17:28,680 --> 00:17:32,920 Speaker 2: roll out of electric vehicles demand increasing LNG supply. What 324 00:17:33,000 --> 00:17:35,639 Speaker 2: does that mean for the short term, Yeah, that's a. 325 00:17:35,720 --> 00:17:38,520 Speaker 4: Very good question as something we look very closely. We 326 00:17:39,119 --> 00:17:42,280 Speaker 4: basically work with power team here at Bloomberghenia have to 327 00:17:42,440 --> 00:17:44,600 Speaker 4: figure out how much more power demand they will be 328 00:17:44,720 --> 00:17:47,200 Speaker 4: and how much DAS will need to meet that extra demand. 329 00:17:47,359 --> 00:17:49,119 Speaker 4: I don't think that in the very short term it's 330 00:17:49,160 --> 00:17:52,840 Speaker 4: going to completely overwhelm the entire system, but definitely does 331 00:17:52,920 --> 00:17:56,720 Speaker 4: something that's going to be of growing importance looking out 332 00:17:56,760 --> 00:17:57,639 Speaker 4: to twenty thirty. 333 00:17:58,040 --> 00:17:59,680 Speaker 2: The next couple of years, but then there's a next 334 00:17:59,680 --> 00:18:02,520 Speaker 2: six months exacting. We're really talking about this next six 335 00:18:02,600 --> 00:18:06,479 Speaker 2: months precisely. Yeah, which done actually brings me to are 336 00:18:06,520 --> 00:18:07,920 Speaker 2: you already looking at next summer? 337 00:18:08,240 --> 00:18:08,400 Speaker 4: Yes? 338 00:18:08,600 --> 00:18:11,439 Speaker 2: And what is the knock on effect between what happens 339 00:18:11,480 --> 00:18:13,359 Speaker 2: this winter and next summer? And when do you kind 340 00:18:13,400 --> 00:18:16,520 Speaker 2: of get to make a decision on what the forecast 341 00:18:16,720 --> 00:18:19,440 Speaker 2: is for next summer? Because the winter gas outlook we 342 00:18:19,560 --> 00:18:22,600 Speaker 2: do that in September headed into the year ahead, well, 343 00:18:22,760 --> 00:18:26,080 Speaker 2: the winter ahead, when do you kind of have to 344 00:18:26,119 --> 00:18:28,120 Speaker 2: make decisions on what this summer is going. 345 00:18:28,080 --> 00:18:30,879 Speaker 4: To look like. Well, that's a very good question. And actually, 346 00:18:30,920 --> 00:18:32,920 Speaker 4: when you were just talking about prices, I think that 347 00:18:33,000 --> 00:18:35,800 Speaker 4: the market is certainly pricing in the weather risk of 348 00:18:36,080 --> 00:18:39,240 Speaker 4: this winter and how it might have repercusion onto our 349 00:18:39,800 --> 00:18:43,720 Speaker 4: summer gas needs, if only for starage purposes, right, and 350 00:18:44,359 --> 00:18:46,359 Speaker 4: if we are to trust our weather are cool on 351 00:18:46,480 --> 00:18:49,320 Speaker 4: that there is a significant weather risk for this winter 352 00:18:49,560 --> 00:18:52,080 Speaker 4: and we might actually need much more LNG this summer 353 00:18:52,280 --> 00:18:54,600 Speaker 4: in order to refeel starts if it goes down by 354 00:18:54,840 --> 00:18:58,760 Speaker 4: something like ten percentage points below the base case, that 355 00:18:58,920 --> 00:19:00,680 Speaker 4: what we think is the most like li scenario in 356 00:19:00,760 --> 00:19:03,520 Speaker 4: the case of a particularly cold winter, maybe not the coldest, 357 00:19:03,640 --> 00:19:06,719 Speaker 4: but something that's like, I don't know, twentieth percent out 358 00:19:06,760 --> 00:19:08,840 Speaker 4: in the last fifteen years. So it's a very real risk, 359 00:19:08,960 --> 00:19:10,880 Speaker 4: and I think the market is pricing that, and that's 360 00:19:10,920 --> 00:19:13,920 Speaker 4: why you're seeing energy prices going to Europe. When you 361 00:19:14,000 --> 00:19:16,959 Speaker 4: look at you know, the future scurf for contrast traded 362 00:19:17,040 --> 00:19:19,719 Speaker 4: for the summer months of twenty twenty six, it's actually 363 00:19:20,080 --> 00:19:23,120 Speaker 4: not that low, not that cheap, even though we're having 364 00:19:23,240 --> 00:19:25,960 Speaker 4: so much more new supply coming on the market, and 365 00:19:26,119 --> 00:19:28,000 Speaker 4: it's yeah, we're scratched our heads over this, but I 366 00:19:28,080 --> 00:19:30,200 Speaker 4: think that much of it is due to the weather risk. 367 00:19:30,600 --> 00:19:32,800 Speaker 4: Can you actually compare that to the last five years, 368 00:19:32,840 --> 00:19:35,399 Speaker 4: because you're right, I asked that question about prices, and 369 00:19:35,440 --> 00:19:36,960 Speaker 4: then we just kind of moved on to the next 370 00:19:37,000 --> 00:19:40,639 Speaker 4: interesting topic. Where are prices looking likely to be at 371 00:19:40,840 --> 00:19:44,040 Speaker 4: this winter compared to the last five years. Yeah, So 372 00:19:44,520 --> 00:19:46,520 Speaker 4: what we say is that if you we get the 373 00:19:46,560 --> 00:19:49,399 Speaker 4: forward curve, if you have like gas prices that are 374 00:19:49,400 --> 00:19:53,640 Speaker 4: around eleven dollars per million of British thermal units, well 375 00:19:53,800 --> 00:19:57,440 Speaker 4: it's not trually not that low. You're seeing like gas 376 00:19:57,560 --> 00:20:00,880 Speaker 4: prices that we're actually holding up. And even though we're 377 00:20:01,000 --> 00:20:03,520 Speaker 4: not quite as high as you know in the immediate 378 00:20:03,640 --> 00:20:06,360 Speaker 4: wake of the energy crisis and the invasion of Ukraine, 379 00:20:06,520 --> 00:20:09,880 Speaker 4: where in twenty twenty three were so completely crazy prices, 380 00:20:10,400 --> 00:20:15,119 Speaker 4: it's still not cheap enough to unlock some price sensitive 381 00:20:15,240 --> 00:20:19,080 Speaker 4: demand in key markets in Emerging Asia. But also it 382 00:20:19,200 --> 00:20:22,719 Speaker 4: doesn't get cheap enough to revert some of the demand 383 00:20:22,840 --> 00:20:25,920 Speaker 4: destruction that we have seen in Europe. And to be fair, 384 00:20:26,240 --> 00:20:29,000 Speaker 4: some of that demand destruction that we've seen can go 385 00:20:29,400 --> 00:20:32,440 Speaker 4: up to twenty percent of your industrial gas demand being 386 00:20:32,880 --> 00:20:35,520 Speaker 4: vanishing basically in the past few years. Some of the 387 00:20:35,600 --> 00:20:38,919 Speaker 4: demand destruction is here to stay simply because the plans 388 00:20:38,960 --> 00:20:42,399 Speaker 4: that I might have used gas might have simply closed 389 00:20:42,440 --> 00:20:46,680 Speaker 4: you to unfavorable economics and shop elsewhere where gas prices 390 00:20:46,840 --> 00:20:47,960 Speaker 4: might be a little bit cheaper. 391 00:20:48,280 --> 00:20:51,320 Speaker 2: That's really interesting because energy demand is increasing but not 392 00:20:51,560 --> 00:20:55,840 Speaker 2: necessarily being met by gas supply in Europe, even though 393 00:20:55,880 --> 00:20:58,000 Speaker 2: in the US that is a really big topic of 394 00:20:58,080 --> 00:21:01,800 Speaker 2: conversation about using to mass produced a gas but because 395 00:21:01,840 --> 00:21:04,840 Speaker 2: Europe actually has very little domestically produced you've seen this 396 00:21:05,000 --> 00:21:07,800 Speaker 2: pivot over time with how the economy is set up 397 00:21:07,840 --> 00:21:08,639 Speaker 2: in energy supply. 398 00:21:08,960 --> 00:21:12,000 Speaker 4: Yes, absolutely, and I think that for the time being, 399 00:21:12,080 --> 00:21:14,680 Speaker 4: we don't really have to worry about the US's you know, 400 00:21:14,920 --> 00:21:19,560 Speaker 4: domestic gas demand taking away from llergy exports. I actually 401 00:21:19,640 --> 00:21:22,159 Speaker 4: had a chat with our US guest senior at Boomrinia 402 00:21:22,400 --> 00:21:24,640 Speaker 4: like a three days ago about this, and they said, 403 00:21:24,760 --> 00:21:27,159 Speaker 4: the basins for guests are not necessarily connected to the 404 00:21:27,240 --> 00:21:29,520 Speaker 4: demand hobs and like much of the gas that's from 405 00:21:29,560 --> 00:21:32,760 Speaker 4: the Permian basin is going to add to lergy exports anyway. 406 00:21:33,119 --> 00:21:37,000 Speaker 4: It actually the supply demand equilibrium, let's say, in US 407 00:21:37,040 --> 00:21:39,440 Speaker 4: guest markets, is not so dire that even in the 408 00:21:39,520 --> 00:21:42,600 Speaker 4: case of acul Windery, we might actually see restrictions on 409 00:21:42,800 --> 00:21:43,439 Speaker 4: energy export. 410 00:21:43,640 --> 00:21:45,760 Speaker 3: So yes, so you end up. 411 00:21:45,720 --> 00:21:51,119 Speaker 2: Seeing geopolitics weighing pretty heavily in some of the discussions, 412 00:21:51,160 --> 00:21:54,159 Speaker 2: specifically when we talk about Russia Ukraine. And one of 413 00:21:54,240 --> 00:21:57,040 Speaker 2: the things that has really come up a lot more 414 00:21:57,119 --> 00:21:59,480 Speaker 2: with our clients lately is saying, Okay, what precedents do 415 00:21:59,560 --> 00:22:02,840 Speaker 2: we have for cycles and commodities of course are very 416 00:22:03,000 --> 00:22:06,320 Speaker 2: no stranger to supercycles, but you know what historical context 417 00:22:06,400 --> 00:22:08,639 Speaker 2: do we have to tell us really how the future 418 00:22:08,760 --> 00:22:11,879 Speaker 2: potentially will play out when these sorts of conflicts arise 419 00:22:12,240 --> 00:22:15,880 Speaker 2: on the supply side, you also have very similar historical 420 00:22:16,000 --> 00:22:18,399 Speaker 2: waves that maybe come out that perhaps are studied and 421 00:22:18,560 --> 00:22:22,480 Speaker 2: discussed a little bit less than geopolitical factors. Can you 422 00:22:22,640 --> 00:22:26,080 Speaker 2: talk about how history has played out in terms of 423 00:22:26,240 --> 00:22:29,560 Speaker 2: these kind of ramp up periods of LNG supply and 424 00:22:29,720 --> 00:22:32,040 Speaker 2: how that has impacted the market and what that might 425 00:22:32,200 --> 00:22:35,320 Speaker 2: tell us about the situation that we find ourselves in today. 426 00:22:35,520 --> 00:22:36,560 Speaker 4: Yes, absolutely so. 427 00:22:37,000 --> 00:22:39,800 Speaker 2: I guess that LNG has a rich and somewhat long 428 00:22:39,960 --> 00:22:42,840 Speaker 2: history in the energy world. You see a first wave 429 00:22:43,080 --> 00:22:47,440 Speaker 2: of energy projects coming up, maybe in the seventies and eighties, 430 00:22:47,560 --> 00:22:50,480 Speaker 2: with countries like Japan that had to essentially the import 431 00:22:50,600 --> 00:22:54,960 Speaker 2: much of their energy resources resource poor countries from other places. 432 00:22:55,520 --> 00:22:59,320 Speaker 2: The specific base in typically Indonesia was one of the pioneers, 433 00:22:59,440 --> 00:23:02,000 Speaker 2: I suppose, or even in Europe with gas coming from 434 00:23:02,040 --> 00:23:05,359 Speaker 2: Algeria on ships pretty early on. And I think that 435 00:23:05,520 --> 00:23:09,040 Speaker 2: we saw a second wave of democratization of sorts for 436 00:23:09,240 --> 00:23:12,800 Speaker 2: LERNG maybe around the twenty tens when you had Australian 437 00:23:12,880 --> 00:23:15,560 Speaker 2: projects kind of like rumping up quickly. But in both 438 00:23:15,680 --> 00:23:18,600 Speaker 2: cases for those first two ways, there was a really 439 00:23:18,760 --> 00:23:21,240 Speaker 2: big difference I think from what from the situation at 440 00:23:21,280 --> 00:23:23,440 Speaker 2: play here, which is that much of the volumes that 441 00:23:23,480 --> 00:23:26,600 Speaker 2: were exported from those projects were underpinned by long term 442 00:23:26,680 --> 00:23:29,800 Speaker 2: contract so they were off takers to this contrice and. 443 00:23:29,880 --> 00:23:32,119 Speaker 4: We sort of knew where it was headed. Who was 444 00:23:32,160 --> 00:23:34,600 Speaker 4: going to buy anuther price, and most of the time 445 00:23:34,800 --> 00:23:38,520 Speaker 4: those prices were being packed to oil prices. So pretty 446 00:23:38,560 --> 00:23:42,600 Speaker 4: stable supply supply, a stable buyer, stable pricing. But I 447 00:23:42,680 --> 00:23:45,680 Speaker 4: think we're headed into a much more chaotic world with 448 00:23:45,920 --> 00:23:49,359 Speaker 4: dis third wave of LLERG coming not only from the US. 449 00:23:49,640 --> 00:23:52,399 Speaker 4: US is going to double their supply, but also from Qatar, 450 00:23:52,760 --> 00:23:55,520 Speaker 4: and in both cases you might not see the same 451 00:23:55,640 --> 00:23:59,720 Speaker 4: amount of contracted energy in their export days. That means 452 00:24:00,000 --> 00:24:03,000 Speaker 4: potentially that Europe can find a better bargain if we're 453 00:24:03,040 --> 00:24:04,879 Speaker 4: in the NAVI supplant market. So it's not assarily a 454 00:24:04,920 --> 00:24:07,960 Speaker 4: bad thing, but definitely is going to make for perhaps 455 00:24:08,080 --> 00:24:12,280 Speaker 4: more volatile rule. I think it dies into the unpredictability 456 00:24:12,359 --> 00:24:14,240 Speaker 4: of prices that you are just talking about. 457 00:24:15,160 --> 00:24:17,639 Speaker 2: We won't do the same history lesson for geopolitics that 458 00:24:17,720 --> 00:24:19,480 Speaker 2: I reference. There is a team for that of Bloomberg, 459 00:24:19,520 --> 00:24:21,400 Speaker 2: but they're not in the room right now. But let's 460 00:24:21,600 --> 00:24:25,280 Speaker 2: highlight a pretty important curve ball. So in addition, to 461 00:24:26,040 --> 00:24:28,200 Speaker 2: the importance of weather and all of this, we have 462 00:24:28,400 --> 00:24:33,560 Speaker 2: brought up Russia Ukraine specifically supplies of natural gas from 463 00:24:33,640 --> 00:24:36,800 Speaker 2: Russia and how important it is for the market in Europe. 464 00:24:37,080 --> 00:24:40,280 Speaker 2: There actually have been an increase in relative terms of 465 00:24:40,400 --> 00:24:44,560 Speaker 2: imports this last year with some sanctions still in place, 466 00:24:44,720 --> 00:24:47,399 Speaker 2: but there is the potential for a full ban on 467 00:24:47,680 --> 00:24:50,720 Speaker 2: Russian gas in Europe to come into place. Leaving aside 468 00:24:50,800 --> 00:24:53,840 Speaker 2: the probability of that happening, let's talk a bit about 469 00:24:53,920 --> 00:24:56,560 Speaker 2: what that would actually mean for the winter ahead and 470 00:24:56,680 --> 00:24:58,919 Speaker 2: what that means for European gas markets. 471 00:24:59,160 --> 00:25:03,120 Speaker 4: Y has been talks in the European Union to complete 472 00:25:03,280 --> 00:25:06,760 Speaker 4: leave bam any imports of Rusion gas, be it through 473 00:25:06,840 --> 00:25:12,000 Speaker 4: pipelines or liquefied on ships energy. Even if this band 474 00:25:12,480 --> 00:25:15,360 Speaker 4: was voted by the European Union, and it would take 475 00:25:15,400 --> 00:25:17,800 Speaker 4: a unanimous vote in order to do that, it wouldn't 476 00:25:17,920 --> 00:25:21,159 Speaker 4: kick in until the end of twenty twenty seven, so 477 00:25:21,600 --> 00:25:25,240 Speaker 4: it's still pretty far out. It wouldn't impact this winter, 478 00:25:25,400 --> 00:25:29,000 Speaker 4: I suppose, and as you pointed out, very ironically, despite 479 00:25:29,359 --> 00:25:33,159 Speaker 4: sanctions on multiple Russian energy projects, so far, imports of 480 00:25:33,320 --> 00:25:36,560 Speaker 4: version energy into Europe haven't stopped at all. Pipeline flows 481 00:25:36,760 --> 00:25:39,560 Speaker 4: might have been reduced to a trickle, but really we're 482 00:25:39,600 --> 00:25:42,080 Speaker 4: seeing a lot of version energy flowing into Europe even 483 00:25:42,160 --> 00:25:44,640 Speaker 4: to this day, so that would be a big change 484 00:25:44,680 --> 00:25:48,040 Speaker 4: if we saw a full blown band being enforced. But 485 00:25:48,160 --> 00:25:50,879 Speaker 4: to your point, it would be a multi year we 486 00:25:50,960 --> 00:25:53,600 Speaker 4: would see it coming, it would be baked into your 487 00:25:53,800 --> 00:25:56,359 Speaker 4: winter and summer gas outlooks in the future because that 488 00:25:56,480 --> 00:25:59,240 Speaker 4: policy would take time to come into effect. Absolutely and 489 00:25:59,359 --> 00:26:02,440 Speaker 4: in the mint. Actually, Russia is more of a Barish 490 00:26:02,520 --> 00:26:05,080 Speaker 4: factory when we look at the market because for the 491 00:26:05,200 --> 00:26:08,359 Speaker 4: longest time we thought that everybody would respect the US 492 00:26:08,480 --> 00:26:13,119 Speaker 4: sanctioned on their new Arctic lendar to project, but China 493 00:26:13,160 --> 00:26:17,119 Speaker 4: has thought in importing cargoes from that project. It's back September, 494 00:26:17,400 --> 00:26:19,960 Speaker 4: so we're actually seeing more export out of Rushad and 495 00:26:20,080 --> 00:26:23,320 Speaker 4: previously thought simply because they didn't respect the sanctions. 496 00:26:23,560 --> 00:26:25,919 Speaker 2: So in reality, less of a curve ball, because we'll 497 00:26:25,920 --> 00:26:28,000 Speaker 2: see it coming. So then I'm going to turn to you, Jess. 498 00:26:28,040 --> 00:26:29,800 Speaker 2: You're going to have to supply me with something that 499 00:26:30,040 --> 00:26:32,800 Speaker 2: is going to be surprising. What is the biggest curveball 500 00:26:32,840 --> 00:26:36,160 Speaker 2: from a weather standpoint that could happen and not saying 501 00:26:36,359 --> 00:26:39,760 Speaker 2: likely to happen, could happen. It is just worth tracking 502 00:26:39,920 --> 00:26:41,320 Speaker 2: as we head into the winter ahead. 503 00:26:41,480 --> 00:26:44,119 Speaker 3: I still wouldn't be surprised if we see more dunkel 504 00:26:44,160 --> 00:26:48,479 Speaker 3: slatta the periods of cooler temperatures and lower wind speeds, 505 00:26:48,720 --> 00:26:50,680 Speaker 3: even though we will still have a few storms hitding 506 00:26:50,720 --> 00:26:54,520 Speaker 3: northwest Europe. I still think potentially between storms, or if 507 00:26:54,600 --> 00:26:56,880 Speaker 3: there is a blocking pattern that sets in, we could 508 00:26:57,040 --> 00:27:00,400 Speaker 3: see another period of low wind speeds and that turn 509 00:27:00,440 --> 00:27:03,399 Speaker 3: we'll impact gas. So we'll see. We'll see what happens 510 00:27:03,480 --> 00:27:07,280 Speaker 3: this winter. I am very hopeful that the Northwest might 511 00:27:07,359 --> 00:27:10,920 Speaker 3: get snow, since I'm a snowbird myself. But in terms 512 00:27:11,040 --> 00:27:14,600 Speaker 3: of the renewable sector versus the gas sector, let's see 513 00:27:14,600 --> 00:27:15,440 Speaker 3: how it bounces out. 514 00:27:15,640 --> 00:27:20,280 Speaker 2: Okay, So long may continue the friendship between the gas 515 00:27:20,400 --> 00:27:24,040 Speaker 2: and meteorologists practitioners. Thank you very much for joining today 516 00:27:24,119 --> 00:27:26,639 Speaker 2: and talking about the interplay between your work and what 517 00:27:26,760 --> 00:27:29,119 Speaker 2: we might be expecting in the year head and you know, 518 00:27:29,480 --> 00:27:32,280 Speaker 2: lots of details that you go into in much more 519 00:27:32,600 --> 00:27:35,320 Speaker 2: granular detail in a couple of reports that we put 520 00:27:35,400 --> 00:27:36,600 Speaker 2: out as we head into winter. 521 00:27:36,920 --> 00:27:38,720 Speaker 3: Thanks so much for having us. Thank you, Dana. 522 00:27:47,560 --> 00:27:50,680 Speaker 1: Today's episode of Switched On was produced by cam Gray 523 00:27:50,920 --> 00:27:54,520 Speaker 1: with production assistance from Kamala Shelling. Bloomberg ne EF is 524 00:27:54,560 --> 00:27:57,600 Speaker 1: a service provided by Bloomberg Finance LP and its affiliates. 525 00:27:57,720 --> 00:28:00,440 Speaker 1: This recording does not constitute, nor should it be construed, 526 00:28:00,440 --> 00:28:04,320 Speaker 1: as investment advice, investment recommendations, or a recommendation as to 527 00:28:04,400 --> 00:28:07,200 Speaker 1: an investment or other strategy. Bloomberg ANIAF should not be 528 00:28:07,320 --> 00:28:11,080 Speaker 1: considered as information sufficient upon which to base an investment decision. 529 00:28:11,200 --> 00:28:14,160 Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes 530 00:28:14,200 --> 00:28:17,879 Speaker 1: any representation or warranty as to the accuracy or completeness 531 00:28:17,960 --> 00:28:20,920 Speaker 1: of the information contained in this recording, and any liability 532 00:28:20,960 --> 00:28:23,639 Speaker 1: as a result of this recording is expressly disclaimed.