At least 30 tankers with liquefied natural gas from the United States are headed to Europe, where the gas and energy crisis has pushed regional LNG prices way above the Asian LNG benchmark and 14 times higher than the U.S. Henry Hub price, according to shipping data compiled by Bloomberg.
Ten LNG tankers from the U.S. have already declared Europe as their destination while another 20 cargoes appear to be crossing the Atlantic en route to Europe, the shipping data showed.
At least another ten LNG cargoes have been diverted from Asia to Europe as European LNG prices are now much higher than the prices in Asia, industry sources told Reuters earlier this week.
In recent days, natural gas prices in Northwest Europe have jumped to over $57 per million British thermal units (MMBtu), up by nearly one-third from last week. Prices in Europe are now around $24/MMBtu higher than the benchmark LNG price in Asia, per Bloomberg estimates.
Earlier this week, European gas prices jumped to an all-time high on Tuesday after natural gas on a key pipeline from Russia to Germany reversed flow eastward and freezing temperatures took hold in many parts of Europe.
The benchmark price for Europe at the Dutch Title Transfer Facility (TTF) surged by 11 percent early on Tuesday to a record 162.78 euros per megawatt-hour.
Freezing temperatures across Europe, low Russian gas supply, and low wind power generation in Germany have all combined to send European and UK gas prices to new records on Tuesday.
According to data from German operator Gascade, cited by Reuters, flows of natural gas from Russia on the Yamal-Europe pipeline via Belarus to Poland and Germany have been falling since the start of the weekend, stopped completely on Tuesday, and then reversed direction from Germany east to Poland.
On Wednesday, the flows on the Yamal-Europe pipeline continued eastward from Germany to Poland, and kept European prices close to the all-time high from the previous day.
By Tsvetana Paraskova for Oilprice.com
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But with the energy crisis in Europe, LNG prices are now 58% higher in Europe than the benchmark LNG prices in Asia.
Freezing temperatures across Europe, low Russian gas supplies, low wind power generation in Germany and nuclear outages in France have all combined to send European and UK gas prices to new records on Tuesday.
A harsh winter could push gas and power prices which are already near record levels higher still in the first half of 2022. Even at the end of the winter season in the spring of 2022, gas prices in Asia and Europe will remain higher than pre-crisis levels. Europeans will pay an additional 350 billion euros ($395) in energy bills next year as global demand for fuel and power threatens to keep prices elevated. All for their hasty energy transition.
Neither Qatari, or American or Australian LNG nor Norway’s gas exports could satisfy the energy demand of the EU countries. Only Russia can. However, Russia may not be inclined to ship additional gas supplies to the EU without an early certification of Nord Stream 2.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
This many cargoes being diverted or resold does not make a lot of sense as a lot of those cargoes were sold and had a destination, you can understand some being resold but this many being diverted smells like government intervention.
The good news is at least the US companies are being paid for vs. in the 1940's in what they called the lend-lease.
I feel for the European citizens because the politicians sold them out explaining how renewables can replace the efficiency of natural gas. I guess someone forgot to tell the politicians, sometimes the wind does not blow and the sun does not shine. A very expensive way to learn this lesson