Page 5 - GLNG Week 39 2021
P. 5
GLNG COMMENTARY GLNG
European gas
companies are trying
to fill up depleted
inventories ahead of the
winter.
become increasingly harder to meet additional 139.1mn tpy of planned new liquefaction capac-
demand. ity is set to come online in this year.
The situation is increasingly putting Asia into And there may be longer-term challenges to
competition with Europe for LNG supplies. contend with, according to Tellurian’s executive
Indeed, European gas prices are also climbing chairman, Charif Souki. The global shift away
as gas companies on the continent try to restock from fossil fuels towards greener energy sup-
depleted inventories. JKM’s premium over the plies had slowed investment in LNG infrastruc-
Title Transfer Facility (TTF) benchmark price ture, he warned recently.
in Europe has narrowed, also pointing to inten- “The world was kind of lulled to complacency
sifying competition. because prices were low for five years, so no
“Competition with Europe will persist,” BCA one felt an urge to plan and everyone got very The situation
Research’s chief commodity and energy strat- religious on environmental protection and it is
egist, Robert Ryan, was quoted by Bloomberg wonderful – we should be – but we should look is increasingly
as saying. “Asia successfully pulled cargoes over at what things actually work rather than simply putting Asia into
last winter by hiking prices to $32 [per mmBtu] what we hope for,” Souki was quoted by Reuters
levels and may well have to do that now to as saying. competition with
attract supply. There’s also the possibility that Potential consequences of the LNG price
this still isn’t enough and governments in China spike – especially on top of last winter – include Europe for LNG
and elsewhere could start ordering factories to buyers rethinking their reliance on the spot
shut down to conserve power.” market. Interest in new long-term contracts supplies.
Traders already expect China to continue has already risen in recent months and could
spot LNG purchases over the next few weeks, grow further still. Last year, the spot mar-
according to Bloomberg, which is anticipated to ket accounted for around 35% of global LNG
push prices even higher than they are currently imports, according to the International Group
as the market continues to tighten. of Liquefied Natural Gas Importers (GIIGNL).
The price increases could also serve as a set-
What next? back to the uptake of LNG as a marine fuel. This
A new wave of liquefaction capacity is under week, OPEC warned in its World Oil Outlook
construction, but not enough is due to come 2021-2045 that the shipping industry was at a
online in the short term to provide immediate “technology crossroads” and that rising gas
relief. According to the International Gas Union prices had resulted in the cancellation of some
(IGU), only 8.9mn tonnes per year out of a total LNG-fuelled vessel orders.
Week 39 01•October•2021 www. NEWSBASE .com P5
