Wave of LNG tankers overwhelms Europe and hits natural gas prices

An LNG import terminal on the Rotterdam port in February 2022.

Federico Gambarini | Image Alliance | Getty Photos

The U.S. is exporting extra LNG to Europe on account of Russia’s warfare in Ukraine and cuts made to pure fuel provides forward of winter, however there was a buildup of LNG vessels ready to unload at ports with European infrastructure unable to deal with the elevated LNG shipments.

Sixty LNG tankers have been idling or slowly crusing round northwest Europe, the Mediterranean, and the Iberian Peninsula, in keeping with MarineTraffic. One is anchored on the Suez Canal. Eight LNG vessels that got here from the U.S. are underway to Spain’s Huelva port.

“The wave of LNG tankers has overwhelmed the power of the European regasification amenities to unload the cargoes in a well timed method,” mentioned Andrew Lipow, president of Lipow Oil Associates.

These delays postpone the tankers’ return to the Gulf Coast of the USA to select up the subsequent load, in keeping with Lipow, and in consequence, pure fuel inventories rise greater than the market anticipated.

The underlying infrastructure difficulty is a scarcity of European regasification capability because of a scarcity of regasification crops and pipelines connecting international locations which have regasification amenities. Consequently, the quantity of LNG on the water — floating storage — will increase and in flip drives down the value of pure fuel.

A map of LNG tankers in path to Europe.

“European fuel storage continues to rise and now exceeds 93%,” mentioned Jacques Rousseau, managing director, international oil and fuel for ClearView Power Companions LLC.

Rousseau mentioned the rise in floating storage, with vessels wanted to maneuver capability across the globe tied up for longer, has contributed to an approximate doubling in LNG tanker charges 12 months over 12 months.

Power specialists inform CNBC they’re keeping track of an EU LNG value cap. The cap was mentioned final Thursday at the same time as costs have come down. “The value cap probably pushes merchants out of the market which might impression future provide arriving in Europe,” Rousseau mentioned.

European fuel costs had soared above 340 euros ($332.6) per megawatt hour in late August, however this week dipped under $100 for the primary time since Russia lower provides. Earlier than the warfare, the value had been as little as 30 euros.

Russia, which provides a big portion of pure fuel to Europe, lower fuel provides as a response to sanctions after the nation’s warfare with Ukraine.

Originally published at Gold Coast News HQ