As european countries struggle with high energy prices along with empty gas reservoirs, Cheniere Energy is sending providential LNG tankers to Europe. Gas prices drop, writes WELT:
Is it the spirit of Christmas or the invisible hand of the market? The fill levels in German and European gas storage facilities are at an all-time low, energy prices jump to new, alarming record levels every day - a fleet of American gas tankers appears on the western horizon as a savior in an emergency to alleviate Europe's energy poverty.
What sounds like a Christmas fairy tale is reality: According to information from the Bloomberg news agency, at least ten tankers with liquefied gas are on their way to Europe. "Another 20 ships seem to be crossing the Atlantic, but have not yet announced their final destination," report the market watchers. "The US cargoes will help offset the lower shipments from Russia, Europe's main supplier."
is it the spirit of Christmas or the invisible hand of the market? The fill levels in German and European gas storage facilities are at an all-time low, energy prices jump to new, alarming record levels every day - a fleet of American gas tankers appears on the western horizon as a savior in an emergency to alleviate Europe's energy poverty.
What sounds like a Christmas fairy tale is reality: According to information from the Bloomberg news agency, at least ten tankers with liquefied gas are on their way to Europe. "Another 20 ships seem to be crossing the Atlantic, but have not yet announced their final destination," report the market watchers. "The US cargoes will help offset the lower shipments from Russia, Europe's main supplier."
Now the frightening price explosion suddenly collapsed with the news of the LNG deliveries, and gas prices on the wholesale market plummeted by ten percent. The appearance of the US ships is like rescuing beleaguered settlers in an American western: the cavalry never comes too late.
The US gas company Cheniere Energy apparently sent at least a third of the ships from its loading port at Sabine Pass in Lousiana. It is unlikely that this time, as in the historical case of the airlift, it will be a pier, i.e. a politically organized act of aid.
However, the energy and especially the natural gas business is highly politicized. For years, the US government has been encouraging the southern and eastern European states, with a lot of money and good words, to build so-called LNG terminals that can make liquefied natural gas (LNG) gaseous again and feed it into the network .
Rick Perry, former energy minister under US President Donald Trump, advertised US LNG as "freedom gas", with the help of which Europe could free itself from the yoke of Russian energy dependency.
An investment that has possibly paid off, economically and politically. In any case, the American gas tankers are reaching Europe at a time when the large Russian gas storage facilities - the largest Gazprom reservoirs are in northern Germany - are almost empty.
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With their statements, Russian politicians like President Vladimir Putin had fueled speculation that Russia would refuse additional gas supplies to Western European markets in order to force the operating license of the eight billion euro expensive and controversial Baltic Sea pipeline Nord Stream 2.
Accordingly, it would be wrong to imagine US President Joe Biden with a long white beard sending Europeans a Christmas present across the Atlantic: If the LNG cargos are politically motivated, then for tough geopolitical motives. However, there is more to suggest that gas deliveries are simply a natural market reaction.
Because the liquefied gas business is usually very short-term. The shipowners often only decide when the LNG tankers are already out at sea in which region of the world gas prices are currently highest and which port they are therefore heading for. In the past few months, US gas deliveries have made the greatest profit in the Asian market, because the economy there was the quickest to pick up again after the peak of the pandemic.
But now the shorter route to Europe has become more interesting for LNG sellers: The gas prices on this side of the Atlantic "show a rare surcharge compared to deliveries to Asia," according to Bloomberg. Customers in the EU now even pay 24 dollars more than Asian customers for a unit of natural gas, calculated in Btu (British thermal unit).
The prices in Europe are now 14 times higher than in the USA. Not the spirit of Christmas or geopolitics, simply functioning gas markets should be the reason for the LNG deliveries from the USA.
The German energy group Uniper in Düsseldorf is one of the buyers. "Uniper has a long-term contract for deliveries from the USA and has also purchased some LNG deliveries from the USA for the next year," the company confirmed in response to a request from WELT: "Some of these deliveries are planned for Europe in the new year."
The relief is already noticeable: "At 8:50 am in Amsterdam, the megawatt hour cost 162.145 euros, 6.2 percent less than the previous evening," reports the Bloomberg agency, which specializes in financial and economic data.
The drop in gas prices also eased the tension on the electricity market: "In Germany, electricity contracts for the next year were 8.8 percent cheaper, the forward price per megawatt hour fell to 296 euros."
More American LNG could also help Europe tackle the electricity crisis in France, where several nuclear power plants have gone offline due to technical problems. In order to cope with these failures, coal and gas power plants would have to be used more and more in several European countries.
At the beginning of January, around 30 percent of French nuclear reactor capacity will be taken off the grid. In addition, the shutdown of three German nuclear power plants on New Year's Eve will exacerbate the European electricity shortage.
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