Germany

LNG export projects looking to take a positive final investment decision (FID) need to sell a high proportion of their nameplate capacity under long-term contracts to ensure sufficient cash flows to underpin the project and obtain financing. U.S.-based projects (new and expansions) totaling more than 350 million tons per annum (MMtpa, 48.3 Bcf/) — against a current global market of 400 MMtpa (52.9 Bcf/d) — are vying for creditworthy offtakers from multiple markets in their pre-FID deliberations. The sense of urgency among project sponsors has been boosted by the Russia/Ukraine war and a potentially resurgent Chinese economy, both of which should promise a bright future for new projects. Plenty of those have reached FID in the last couple of years, but what is holding others back from taking the same step? In today’s RBN blog, we’ll look at some of the factors impacting those decisions and the long-term implications that flow from them. 

Russia’s invasion of Ukraine in February 2022 caused panic in European gas markets that were already on the brink due to low winter inventories. Near-term supply/demand balances suddenly took on a heightened urgency, and everyone knew that policy and infrastructure changes were needed, pronto. The most immediate concern was the very real possibility that the winter of 2022-23 could see gas rationing within the European Union (EU) due to supply shortages. However, with winter now in retreat, Europe is emerging with record volumes of stored gas accompanied by prices that have fallen to pre-invasion levels. This is no time for complacency, though. While it’s many months away, the winter of 2023-24 looms, with dire warnings that things could be considerably worse in gas markets. In today’s RBN blog, we evaluate how European gas and LNG markets have managed over the last 12 months and discuss the implications for the next year. In particular, we look at the European Commission’s (EC) efforts to inject reforms into European gas markets, not only to accommodate supply disruptions but also to set the stage for a gas market no longer reliant on Russian supplies.

With liquefaction capacity and supply of liquefied natural gas on the rise and LNG demand flat, prices for super-cooled, liquefied gas are low and may well stay low into the early 2020s. That’s a concern for LNG suppliers, who (like all suppliers) would prefer it if demand was soaring and supply was a little tight. There are some rays of hope, though, in what many have seen as a gloomy time for the LNG sector. After all, with spot LNG prices below $5/MMBtu (far lower than they were 30 months ago) and ample supplies of LNG available, a growing list of nations are looking either to become LNG importers or to significantly expand their LNG imports. Today, we continue our review of the LNG market with a look at the new demand that may be spurred by supply surpluses and low prices.

As we approach the 238th anniversary of our independence from the UK, is it possible the British Isles are about to become at least a bit dependent on us, natural gas-wise? With UK gas production falling, and with the aggressive actions of Vladimir Putin raising the specter of gas-supply interruptions from Russia to Western Europe, a case could be made that our jolly-good friends across the pond may be thinking risk-mitigation, supply diversification, and deals to buy more LNG from their former colonies. (They already plan to buy some.) But, as we discuss in today’s blog, gas prices in the UK are currently very low and the situation is, well, complicated.