Page 5 - GLNG Week 36 2022

GLNG COMMENTARY GLNG

Freight rates for LNG tankers are growing, and willing to pay almost anything this year in order
the tanker market is now sold out for winter as to meet demand and to build up a reserve ahead
energy majors are refusing to release their vessels of the coming winter.
as they typically do at the end of summer. In bid to control gas costs, European Commis-
A crucial issues is Europe’s LNG import capac- sion President Ursula von der Leyen proposed
ity, especially if some tankers are hanging around this week to place a cap on the price paid for
offshore waiting for space. Russian gas, which was suggested by media at
The EU has 169 bcm of annual LNG import EUR50 per MWh.
capacity, according to the Economist Intelli- “We must cut Russia’s revenues, which Putin
gence Unit, while it imported 98 bcm in 2021. uses to finance this atrocious war against
However, Russian pipelines supplied 153 bcm Ukraine,” she said.
in 2021, meaning that the unused 71 bcm in She said that at the beginning of the war in
Europe could not come anywhere near replacing February, Russia’s pipeline gas accounted for
Russian supplies. 40% of all gas imported by the EU. Today this
Countries are pushing ahead with new termi- had fallen to 9% of gas imports.
nals, such as Germany, but this will take years to Her comments form part of what the EU has
materialise, meaning that LNG cannot replace dubbed an “emergency intervention” into the
Russian gas in the short term EU’s power market.
As well as a Russian price cap, von der Leyen
Available options outlined several more ways to counter what she
If Europe cannot just buy LNG at any price, as it terms as the Kremlin’s “manipulation” of the gas
cannot regasify it fast enough, what else can be market. These include: reducing peak power
done to meet gas demand? demand; a cap on windfall revenues generated by
Europe’s energy prices are now at levels that low-cost power production, principally renewa-
could scarcely have been thinkable only six bles; a tax on surplus profits made by fossil fuel
months ago, with gas futures hitting €238 per companies and more money made available to
MWh on 6 September, eight times the levels seen support utilities and power supplies companies.
12 months ago. These five issues are set to discussed by EU
Electricity prices also reached record levels energy ministers as in an effort to reduce the cost
at the end of August, mainly driven by the close of energy for Europe’s consumers.
connection between gas and power wholesale Some governments have already proposed
prices. Put simply, if wholesale gas prices go up, putting in place energy saving drives, such as
then so do power prices. turning off lights in public buildings, or taxing
Russia’s invasion of Ukraine, and Moscow’s both fossil fuel and renewable firms in a bid to
reduction of gas supplies to Europe – Nord- redistribute fund to hard-hit consumers.
Stream II was abandoned by Germany, while France and Poland have both suggested
NordStream I has now been shut down by the that they would favour a cap on the price that
Russians, meaning that Europe is desperate could be paid to Russia, while Germany is more
for gas from alternative sources, and has been cautious.

Week 36 09•September•2022 www. NEWSBASE .com P5