Ive here. I recommend reading this article in conjunction with Doomberg’s latest products, Measured twice: Assessing Europe’s gas crisis. He converts the often-changing gas data into billion cubic feet, rather than the more common (but still far from standard) measurement of billion cubic meters.

In any case, Biden’s offer to Europe for an additional 15 billion cubic meters of LNG is only 10% of the annual output he gets from Russia. Doomberg extrapolated other numbers, concluding that the amount of LNG needed to fill the Russian gap in Europe is 30% of global supply. Note that the products produced now are mainly subject to long-term contracts.

Consider this part of his article, which confirms the suspicions we and readers have raised about implementation issues (emphasis on originality):

In addition to commercial deals to secure alternative supplies, there is also the question of Europe’s ability to accept more LNG imports. Regasification requires dedicated import terminals and pipelines to distribute gas, both of which appear to be in short supply.Here are two sentences from Reuters story Posted before Russia invaded Ukraine:

“This means that most of the LNG terminals in Europe running at full capacityespecially in Northwest Europe, which feed the large economies of Britain, France and Germany, raising the question of how much LNG can be processed.

“Spain has the largest capacity in continental Europe, with six terminals, while Germany does not. Spain’s terminals were only 45% utilised in January,” data and analytics firm Kpler said.

‘Spain’s problem is that it has limited pipeline connections to the rest of Europe Laura Page, a senior LNG analyst at Kpler, said there was only one pipeline to transport gas from Spain to France, so capacity was somewhat constrained.

Germany recently announced its intention to build several new LNG import facilities, three of which are under construction. improving at a faster rate. A pier in Brunsbuettel will handle 0.8 bcf/dA sort of project The Dow Stadium site will handle 1.3 bcf/dayand previously shelved 1.0 bcf/d Wilhelmshaven project recovery and accelerate.Although these projects will offset 20% of Europe’s reliance on Russian supplies, they Will be put into use in the 2025-2026 time frame.

Needless to say, this situation isn’t pretty. That’s the point of Irina Slav’s discussion before you get to the price impact issue.

By: Irina Slav, a writer for Oilprice.com with over a decade of writing experience in the oil and gas industry.Originally Posted in oil price

• After Putin’s decision to invade Ukraine, Europe is determined to wean itself off Russian gas, with US LNG as one of the main alternatives.
• Biden has pledged to export an additional 15 billion cubic meters of gas to the European Union this year, a move that has pushed up prices.
• Natural gas prices hit their highest level in 13 years last week, and while rising coal prices were partly due to higher coal prices, rising liquefied natural gas exports also played a role.

Meet Europe, the newest and most unlikely star on the LNG stage. Given the danger of an unprecedented energy crunch, Europe has recently had to reconsider its emissions reduction ambitions. U.S. natural gas producers are more than happy to help. Cue worries about domestic shortages.

For weeks, EU governments have been discussing ways to reduce their reliance on Russian oil and gas.

Had claim Even if gas imports from Russia are cut, the EU can survive the summer because there are enough gas reserves. Still, Brussels has not imposed an embargo on Russian gas, which Germany admits it cannot afford.

Had plan An urgent search for alternative suppliers, including pipeline gas from North Africa and Central Asia, as well as LNG from Qatar and the United States, to reduce over-reliance on Russian gas. America has been eager to help.

President Biden Commitment Gas exports to the EU in the form of liquefied natural gas rose by 15 billion cubic meters this year, while the bloc pledged to create 50 billion cubic meters of U.S. LNG demand a year “through at least 2030”.

Europe was already the top buyer of U.S. LNG earlier this year and hit a record high ahead of mutual commitments 12.5 billion cubic meters In the form of ultra-cold fuel. But there is a problem. Demand, especially from Europe, will rise sharply this year: Wood Mac expects European LNG to increase by 25 metric tons by the end of 2022. On the other hand, global supply is expected to increase by 17 million tons.

Signs of this imbalance are already showing in the United States.Natural gas prices last week reach the highest level While some analysts have blamed rising coal prices for 13 years, record LNG exports have undoubtedly contributed to the trend.

Tortoise portfolio manager Rob Thummel told MarketWatch last week that natural gas prices are “sensitive to any near-term supply concerns arising from events such as the Russian coal export ban, unusually cold weather, etc.” But perhaps more importantly, U.S. natural gas inventories have fallen.

For the week ended April 1, the U.S. Energy Information Administrationreport National natural gas inventories are 17% below the five-year seasonal average. The agency noted that working gas inventories were within the five-year average, but prices continued to rise.

Reuters’ John Kemp points out in a recent article Pillar U.S. natural gas inventories ended the 2021-2022 winter at a three-year low of 1.382 trillion cubic feet. He also reported that job inventories were 19% below their pre-pandemic five-year average in early April. And all because of increased exports.

Summer is typically a season of lower demand, so prices are likely to stabilize at a more pronounced level, while U.S. exports to Europe remain high, assuming Europe free up space for incoming gas. But exports are likely to remain strong as the northern hemisphere moves into the 2022-2023 winter.

Sanctions against Russia will remain in effect; the EU and the US have made this clear regardless of how the war in Ukraine develops over the next six months or so. If anything, by then, there will be more sanctions, possibly directly targeting the country’s hydrocarbon industry other than coal. This suggests that the supply and demand situation for U.S. natural gas may become even tighter.

Earlier this month, U.S. shale gas and LNG producers meet the delegation From several EU member states eager to increase purchases of U.S. liquefied gas. This desire could be critical to the final investment decision for new LNG export capacity. But in addition to the desire, gas producers will need substantial long-term commitments to make these projects economically meaningful.

Most eager LNG importers are small gas consumers, such as Latvia and Bulgaria. On the other hand, other countries participating in the conference, such as Germany and France, are valuable future customers, although renewable energy plans may damage their value in the long term.

In fact, the industry itself has said as much: “The capacity challenge in 2022 is great, but the opportunity in a few years is really great,” Fred Hutchinson, chief executive of trade body LNG Allies, said on the sidelines of the conference.

These opportunities aren’t just in Europe either. Matt Sallee, senior portfolio manager at Tortoise, said on a regular podcast this week that Asia is eager to reduce its pollution levels and is investing billions in gas import infrastructure.

“These projects primarily target the use of U.S. natural gas to reduce Asia’s reliance on coal, thereby reducing carbon dioxide emissions by more than 50 percent, a key tool in meeting global emissions goals,” Sallee said, noting, “As you can imagine, That way, most of the investment is in the 30 LNG import terminals under construction in China. The bottom line is between reducing Russia’s reliance on Europe and Asia’s reliance on coal, the demand for U.S. gas in the next few years is absolutely huge.”

As a result, we are likely to see more LNG export capacity come on stream in the U.S. in the coming years. The problem is that in those years, as foreign demand is strong and production tries to catch up, prices for commodities may still be higher than comfortable domestic prices. In other words, we are likely to see a repeat of the longer-term higher scenario we have seen in crude oil.