Kilo Petrochem

Before winter comes, European countries have said that their natural gas storage facilities have been filled to higher than normal levels. Since this year, the import volume of liquefied natural gas (LNG) in Europe has increased sharply compared with the same period last year, but other problems have followed.

According to the data released by the International Energy Agency, the new demand for natural gas in Europe has risen sharply. In the first eight months of this year, the LNG import volume in Europe has soared by 65% compared with the same period last year. LNG is no longer a supplementary energy in Europe.

More and more LNG cargoes arrive at European ports at such a fast speed, but the LNG import terminal capacity of ports is not enough to re gasify so much LNG.

These LNG ships have blocked the port, and ship freight rates have soared, further pushing up the already record LNG prices.

Omar Nokta, chief shipping analyst of Jefferies, an American investment bank, once said that natural gas buyers would include LNG ship freight into their total costs.

Earlier this week, the Associated Press reported that more than 35 LNG ships were drifting near Spain and the Mediterranean Sea, waiting for the unloading berth of the LNG regasification terminal.

Spain is not the only country in a "special transport situation". Near other ports in Europe, there are also dozens of LNG ships waiting to unload, and these ships are now serving as floating gas storage.

Spain has 6 LNG import terminals, the largest in Europe. In Spain, it is blocked like this, not to mention other countries.

LNG transportation cost has been rising

With the continuous flow of liquefied natural gas to Europe, the shortage of LNG ships is becoming increasingly serious, and the ship freight is soaring.

According to the data of the Baltic Sea Exchange quoted by the media, since the beginning of this year, the LNG shipping rate in the spot market has increased six times, reaching 450000 dollars a day last week.

According to the expectation of industry brokers, as demand remains strong before winter, this figure will further rise to $500000 per day. However, this is not the upper limit. Some brokers even believe that by the end of this year, the shipping rate of LNG may soar to $1 million a day.

The freight of LNG carriers has been pushed to the sky high price, adding another sum to the already expensive LNG import bill in Europe.

Other factors

Another factor that makes LNG transportation more expensive is that a large part of LNG ships are used as floating gas storage due to port congestion, resulting in a shortage of transportation ships.

There is also a potential factor that may drive up LNG costs. Rystad Energy, a Norwegian energy consulting company, recently predicted that the restart of the Freeport LNG project in the United States may be delayed.

The project was closed after an explosion in June, which had an impact on the European energy crisis. If the restart of free port LNG terminal is delayed, it means that more natural gas will be stranded in the United States and cannot be exported to Europe and other regions of the world.

Rystad pointed out that such delay would push up the price of natural gas in the United States, and then automatically increase the price of liquefied natural gas in the international market.

The traders believe that as winter approaches, the price of bulk commodities will continue to rise, and the price of LNG delivered in November and December is likely to be 2 dollars/million BTU higher than the current price.