After the Russian invasion of Ukraine, one thing became clear to Europe: If the gas supply from Russia were to stop, the continent would face huge problems. Now the raw material is becoming scarce and a global LNG hunt has begun. States on the other side of the globe are therefore in the dark.
Russia is supplying less and less gas and the pipelines are coming to a standstill. Concerns about gas shortages have been increasing in Germany and other European countries since the outbreak of war in Ukraine. In order to prevent closures and a cold winter in the houses, Europeans stock up on “Liquefied Natural Gas” (LNG) – and thus drive up transport and raw material prices. The cost of LPG has skyrocketed by more than 1,000 percent in the last two years. And while Europe fills its storage tanks, the lights go out elsewhere in the world.
The main reason for this is the huge LNG tankers that cross the world’s oceans. With a capacity of around 150,000 cubic meters, spread over up to six tanks, the ships that are now heading for Europe previously set off for Pakistan, Bangladesh, Myanmar and India, emerging countries that often get nothing when it comes to energy supplies. They relied on LNG for their energy supply early on, reports “Manager Magazin”. The price increase now has serious consequences for them.
In Pakistan, for example, the power goes out for several hours a day. As a result, air conditioning and the Internet no longer work. Important industries must also be taken off the grid. Scenarios that Europe is keen to avoid but are becoming increasingly common in India, Bangladesh and Myanmar.
Tankers are in high demand these days. This inevitably leads to a price increase on the spot market. As a result, poorer countries can no longer afford the ships. So the gas tankers go somewhere else – to Europe.
As a result, some emerging markets are facing difficult times. “The really brutal and harsh reality is that Europe is pricing out large parts of emerging markets. This is unsustainable in the long term,” the magazine quotes Henning Gloystein, director of energy and climate at the Eurasia Group.
The increased demand for liquefied gas is particularly evident when looking at the USA. The export prices for LNG have been rising rapidly since April last year. The price peak was reached in April 2022: $10.33 per thousand cubic feet.
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Last year, the US was among the top 4 LNG exporters in the world, along with Qatar, Australia and Russia. Australia exported around 78.5 million tons of the commodity to the world, Qatar 77 million and the US 67 million tons. In the first half of 2022, however, the country quickly rose to become the largest LNG exporter. According to a report by the U.S. Energy Information Administration. In these six months alone, European countries purchased more LNG from the USA than in the entire previous year.
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The emerging countries are therefore left behind. The whole thing apparently even goes so far that existing gas supply contracts – for example to Pakistan – are terminated, as the “South China Morning Post” reports. The Reuters news agency reports that shippers are now even willing to pay contractual penalties in order to divert loads to Europe for significantly higher prices.
So far, Italy, France, Turkey and Spain have been the most involved in the LNG market and are among the largest importers in Europe. In the coming years, the liquid gas infrastructure is also to be further expanded. Germany plans to increase its imports significantly in 2023.
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Terminals are already being built intensively to store the gas. Spain, France and Ireland are also planning to build several new terminals.
Spain, for example, imported around 14 million tons of LNG in 2021, the highest level in Europe. The advantage of the Iberians: they currently have the most LNG import terminals. All in all, the Europeans readjusted their natural gas strategy with the outbreak of the Ukraine war and are now pushing ahead with their plans at a rapid pace – to the chagrin of the emerging countries.
