Bloomberg are reporting that Europe will have to pay a premium to stay warm as the year has starts off with a cold snap.
European countries from France to Greece are losing out in a search for LNG cargoes amid a freezing spell, as ships sail to buyers in Asia willing to pay a higher price to meet peak winter demand. The lack of LNG has prompted France’s grid to call for more of the fuel to be supplied by southern terminals and issue the highest warning level on supplies for a second day.
The expansion of LNG trade has allowed the fuel to break out of conventional regional markets and become a global commodity. While the growth has evened out access to gas worldwide, it has hurt some buyers by ratcheting up competition among consumers during periods of increased demand.
Buyers in northeast Asia, the biggest consumer, are paying a two-year high of about US$9.90 per million British thermal units for spot LNG cargoes shipped from Qatar or the US, meaning European countries, where prices have typically been lower, need to pay more.
The jump is a result of cold weather across the northern hemisphere, which increases consumption of the heating fuel. Temperatures in southeast Europe could fall to -9°C, compared with a 10-year average of 1.5°C, while central European temperatures may fall to -7.4°C.
Europe has increased imports by pipelines from suppliers including Russia, with Moscow-based Gazprom PJSC exporting record volumes to the region. As volumes shipped on those links gets nearer to capacity, buyers are getting in line for the limited number of LNG cargoes available.
Read the article online at: https://www.lngindustry.com/liquefaction/11012017/europe-left-in-cold/