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Price war between Europe and Asia for LNG

Analyst Kolobanov says Europe will have to wage a price war with Asia for LNG.

Sergey Kolobanov, Deputy Head of the Economics of Fuel and Energy Sectors of the Central Strategic Research Centre, predicted a price war between Europe and Asia for liquefied natural gas (LNG). His words are reported by RIA Novosti.

According to the analyst, at the moment, while pumping gas into underground storage, Europe may face two problems: unpredictable weather and competition for LNG from Asia. “The liquefied gas market operates mainly on medium and long-term contracts. And suppliers are not interested in terminating them: the reputation of a reliable partner is important to them,” he said.

As Kolobanov explained, the volume of LNG that is available for delivery under spot or short-term contracts is about 190 billion cubic meters after regasification. This is not much, so a price war with Asia is expected for these volumes, which, in turn, restores the economy after the pandemic.

However, it is most likely that unpredictable weather can interfere with the Europeans. Thus, gas consumption is affected by two main factors. These are the heat, which increases the consumption of electricity for air conditioning, and the wind, on which the generation of electricity from renewable energy sources depends. Therefore, in calm and hot weather, the demand for gas generation increases.

Earlier, the Financial Times (FT) reported that the cost of chartering tankers for the transport of liquefied natural gas (LNG) reached a ten-year record. Thus, the freight of an LNG tanker cost $120,000 per day, which is 50 percent more than last year.


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