Joyce Lee and Florence Tan

DAEGU, South Korea (Reuters). Energy security is a key priority for all importers. The forecasts of volatile gas prices and tighter supplies in the future are keeping buyers at wits end and preventing the push toward decarbonisation.

Europe imports record amounts of liquefied LNG (LNG) after Russia’s top supplier was disrupted in the wake of Ukraine. The Ukraine crisis triggered a rise in prices across Europe and Asia, which caused inflationary pressure and delayed countries’ efforts to transition to natural gas.

At the World Gas Conference, Yalan Li (chairperson of Beijing Gas Group’s board of directors) stated that “Geopolitical conflict has made gas markets instabilized.”

She added that gas prices are unbearably high for users, creating a greater likelihood of coal’s return. Li stated that tight natural gas supplies, especially in winter, have affected the trust of users and governments when it comes to transitioning into gas.

China, the world’s top LNG importer last year, relies on imports to meet nearly half its gas needs. As China, the top global energy consumer, turns to more affordable coal for its gas needs this year, imports of LNG from that country are expected to decrease.

India is another important growth market for LNG. India too uses more coal, and has slowed down its spot LNG purchases because of high prices.

The conference saw executives call for increased financing in the oil sector and investment to stabilize prices and boost supply to sustain the momentum of the recent coal-to-gas transition.

Stabilising gas prices is the industry’s top priority as prices and volatility are unacceptably high for buyers, state-run Korea Gas Corp’s (KOGAS) Chief Executive Officer Chae Hee-bong said.

He said that if the current state of affairs continues for too long, experts believe it will cause demand destruction in particular emerging nations. Furthermore, he added that prices must stabilize to insure long-term growth.

SK E&S Vice Chairman Yu Jeong-joon called on international financial institutions to provide more support for developing countries’ shift to gas.

In Japan, LNG supplies from Russia’s Sakhalin-2 are still flowing despite disruption concerns but Tokyo has stepped up efforts to diversify and invest in supplies elsewhere.

LNG purchases are “going from just in time to just in case”, said Yukio Kani, managing executive officer at Japan’s top importer JERA, underscoring the need to secure supplies.

“The world has been trying to move toward decarbonisation, and we really tried to secure sustainable energy but we face a serious challenge in achieving it,” he said.

Kani explained that LNG buyers looking to buy in the developing world have been left behind by high LNG prices. JERA has invested in two gas-fired power stations in Bangladesh and the Philippines.