A ship carrying GLN (liquefied natural gas) leaves the Montoir-de-Bretagne terminal near Saint-Nazaire (Loire-Atlantique), April 12, 2022. SEBASTIEN SALOM-GOMIS / AFP
This is the story of an LNG carrier that left Freeport, Texas for Asia on March 21, abruptly turned around after 12 days at sea and re-crossed the Panama Canal to head for Gibraltar, costing $1 million ) had to pay tolls for the round trip. It doesn’t matter, says the Bloomberg agency: The “high premiums” offered on the old continent have convinced the company BP, the charterer of the British listeners, to deliver their precious cargo of liquefied natural gas (LNG) to a European port. These unusual target changes symbolize the current upheavals in the world gas market.
Europe will buy more and more LNG, especially from the US. The European Union (EU) faces the enormous challenge of replacing 155 bcm of Russian gas annually, or 40% of its consumption, with Germany and certain countries in Eastern Europe. For the time being, gas is still flowing from Siberia: it brings Russia 400 million dollars a day. Moscow even increased its supplies by 40% between January and March – including through the Brotherhood gas pipeline that crosses Ukraine. For how much longer ?
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In fact, on March 8, the EU unveiled the REPowerEU plan, which envisages reducing its supplies by two-thirds by the end of 2022, to finally stop doing so in 2027. LNG is one of the main components. “Since autumn [2021]Europe significantly increased its LNG purchases with a record first quarter [2022], notes Armelle Lecarpentier, chief economist at the international association Cedigaz. Prices are higher in Europe than in Asia and the United States has diverted its flows. All the easier, according to her statement, that “the flexibility of American contracts makes it possible to supply the most attractive markets”.
USA Winner
Two-thirds of American exports have gone to the old continent in recent months; in the first quarter, LNG became the main source of gas, ahead of Russian gas pipeline supplies. Currently, 70% of LPG goes to Asia (China, Japan, South Korea, etc.). But LNG’s share will increase in Europe amid sharply growing demand, said Christopher Kuplent, an analyst at Bank of America, although he estimates replacing even a third of Russia’s gas in a year will be “very difficult”. . .
The United States, which has become the world’s largest exporter five years after delivering its first shipment, will play an important role and will largely benefit from the situation. For now, the Americans have cheap Texas shale gas and a reserve of additional liquefaction capacity that can supply Europe (around 20 bcm). President Joe Biden staged this prospect by presenting himself as the savior of Europe with 50 bcm a year promised to the EU, without having the slightest power over American producers. The additional LNG delivered to Europeans depends only on the price they are willing to pay.
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