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For large parts of the year, customers in China, Japan and South Korea have outcompeted Europeans on the price of liquefied natural gas (LNG). This type of gas is widely used in power stations to generate electricity.
Now, however, lng ships on their way to Asia have begun to turn halfway to transport lng to European customers who are willing to pay a hefty premium for the gas, writes Financial Times.
This is happening after an acute shortage of gas in Europe, which has sent prices to extreme heights one has never been close to seeing before.
The price difference between deliveries to Europe and Asia is now the highest ever, according to energy data provider Platts.
Unusual movements
In the market you can see very unusual ship movements, according to Alex Froley, analyst at ICIS, which monitors lng ships, the newspaper writes.
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For that, American ships, which were on their way to Asia or have been in Asia, have turned to Europe. In addition, it is now reportedly the first delivery of Australian lng to Europe in twelve years, since 2009, when a couple of cargoes were sent to Great Britain and France.
Russian brake
The reason for the low stocks is a combination of high gas demand globally and the fact that Russia has been sending little gas to Europe for several months.
In the last couple of days, the supply of gas from Russia to Germany via the long and important Yamal-Europa pipeline has been significantly reduced. On Tuesday, several media outlets reported that the supply of gas through the pipeline had stopped completely, and that Russian Gazprom had not ordered export capacity today, Tuesday.
– When you then enter the winter with extremely low gas stocks, it starts to get cold, it blows little and the Russians pinch even more on the gas, then it becomes explosive, said oil and gas analyst Helge André Martinsen in DNB Markets to DN Tuesday.
He has also noted the ship’s activity, and on Wednesday refers to the raw material analysis company Kpler, which says that seven longboat ships have turned to Europe after first targeting the northern areas of Asia.
– We are in unknown territory
On Tuesday, gas prices rose to a record high of 60 dollars per so-called million btu (British thermal unit). Transferred to oil equivalents, this is equivalent to a sky-high 345 dollars per barrel.
Martinsen did not hold back when he had to describe the situation in the European gas market.
– We are almost five times above the previous «all-time-high». We are in unknown territory. It is impossible to say what will happen in the coming weeks. The market is almost on the verge of collapse.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases using a link, which leads directly to our pages. Copying or other use of all or part of the content may only take place with written permission or as permitted by law. For additional terms look here.
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