Page 4 - FSUOGM Week 37 2022

FSUOGM COMMENTARY FSUOGM

War in Ukraine continues to

influence global LNG flows

China is snapping up discounted Russian LNG, while also diverting some cargoes

to other countries, and the US continues to target European buyers

GLOBAL THE war in Ukraine and the resulting sanctions the war and its goals in Ukraine. Thus there is
on Russia continue to influence global LNG still no end in sight, and the impact on the global
WHAT: flows. In recent days, China was reported to be LNG trade will be ongoing. For China, this rep-
The war in Ukraine buying up discounted Russian LNG as less gas resents continued access to cheaper Russian
continues to affect global flows from Russia to Europe. However, it con- LNG. For the US, it is a reason to keep focusing
LNG flows. tinues to divert some cargoes to other countries on European buyers as new liquefaction capacity
amid depressed demand at home, while other starts up over the years ahead.
WHY: buyers are potentially more willing to pay higher
China is snapping up prices for gas. Discount LNG
discounted Russian LNG, Meanwhile, US LNG producers continue As Europe increasingly shuns Russian gas – and
while the US is seeking to target the European market, where buyers Russia itself restricts pipeline flows to Europe –
to send more cargoes to are seeking alternatives to Russian gas with China has emerged as an attractive alternative
Europe. increasing urgency ahead of the winter. Oth- destination. Citing traders familiar with the
ers are seeking to buy LNG from US terminals matter, Bloomberg reported this week that sev-
WHAT NEXT: with a view to potentially reselling it to Europe, eral cargoes from the Sakhalin-2 LNG plant were
Super-major Chevron has as seen in recent moves and comments made by sold for delivery to China at nearly half the cur-
also voiced its intention super-major Chevron. However, there have also rent spot price in a tender that closed in recent
to target the European been warnings that the US will need more gas days.
market. for its domestic market as the winter approaches. Even at half the current spot price, however,
While Ukraine has made recent territorial the LNG remains profitable given how high
gains, Russia has reiterated its commitment to prices have risen recently. And for China, access

P4 www. NEWSBASE .com Week 37 15•September•2022