LNG becomes the most important maritime market in 2022

Jhe LNG tanker market should ride the existing “wave” of increased demand throughout the second half of the year. In its latest weekly report, shipping broker Intermodal said that “As part of Europe’s efforts to reduce its dependence on Russian gas, LNG has currently become the most geopolitically important fuel. Since July 27, Gazprom’s shipments on the Nord Stream pipeline have been flowing at 20% capacity, dropping to 33 m3. The price of the 1-month TTF Forward recovered, following Gazprom’s announcement, to reach €208.5/MWh on August 2, +126% month-on-month, +493% year-on-year. Meanwhile, electricity prices in Germany soared to €370/MWh from a year earlier they were trading below the €60/MWh benchmark, marking a surprising 617% year-on-year increase. “.

According to Intermodal research analyst, Ms. Chara Georgousi, “Rising prices are translating into increasing pressure on the EU to look for alternative power sources, to keep the industry running during the crisis. coming winter. Failing this and in case of emergency, EU leaders have agreed on a mandatory 15% reduction in gas consumption. In addition to the current major EU suppliers, namely the United States (representing 47% of EU imports in HY22) and Qatar (representing 15% of EU imports in HY22), some minor suppliers are expected to increase their exports to the EU, thereby diversifying the bloc’s alternative LNG sources.

Source: Intermodal

With the anticipation of the reopening of the Trans Niger gas pipeline after August 22, the EU will be able to increase its imports from the country. The pipeline, which is currently closed due to ongoing theft and vandalism issues in the country, is expected to double exports to the EU. The EU now sources 14% of natural gas from the country. Meanwhile, on July 11, the EU signed a new deal with Azerbaijan, amid fears of a possible complete cut off of natural gas from Russia. The country, which supplied 8.1 bcm to the EU in 2021, is expected to deliver around 12 bcm in 2022 through the Trans-Adriatic Pipeline, while the deal implies that by 2027 the country will supply a minimum of 20 billion m3 per year”.

Ms. Georgousi added that “on July 25, EU gas storage was around 67% of capacity, which is in line with the 5-year gas storage average for this time of year. However, in a research note on August 1, BofA pointed out that EU gas stocks for the winter were likely to prove insufficient, as it believed gas prices would rise even higher. Worries over a possible recession in the EU and the impact of energy prices on the EU economy are growing, adding further pressure on the euro, which fell to $1.02 at the time of writing. A possible shutdown of Russian gas supplies to the EU could lead to a reduction in GDP of up to 1.5% amid a cold winter and the bloc’s inability to save energy”.

She also noted that “under the current circumstances, with soaring natural gas and energy prices in the EU area, it is likely that next winter will push the supply/demand balance to its limits. , which threatens the functioning of the industry. Up to 17% of industrial demand for natural gas could be destroyed during the winter, while many companies may have to completely shut down their facilities,” concluded Ms. Georgousi.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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