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Why Europe's Gas Glut Is Worsening
By Irina Slav - Feb 03, 2020, 3:00 PM CST
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Cameron LNG
Europe could import some 100 million tons of liquefied natural gas this year as many cargoes turned down by Asian buyers head for the continent, Reuters has reported, citing energy analysts.
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Last year LNG imports to Europe reached 85 million tons, an all-time record at the time. Yet it seems that depressed demand for LNG in Asia—a key market for the blooming industry—will drive this year’s intake by European countries substantially higher, with 78 cargoes of excess LNG coming from Asia into northwestern Europe.
The problem is that the European LNG market is already oversupplied. Last year, the Gate Terminal in the Netherlands, which takes in a lot of the LNG coming into the continent, said it processed a record 171 LNG carriers in 2019. It seems a lot of the LNG remained in storage, sparking concern that soon Europe will not be able to handle the unwanted LNG of Asia, not least because of unseasonably warm weather that has pressured already lackluster demand further.
This state of LNG fundamentals has already driven prices low. The November and December spot price for LNG in the Netherlands averaged some $3.95 per million British thermal units. It was the lowest for this time of the year since January 2004, Reuters noted in a report. But as the glut deepens, traders expect prices to fall further, to $2.4 per mmBtu later this year.
“There is less room to inject gas in storage this summer and a lot of coal to gas switching has already taken place,” an Energy Aspects analyst told Reuters.
European authorities have approved the construction of new LNG import terminals but these have yet to be built, so capacity is indeed already stretched. If the warm spell continues, some LNG production terminals might need to shut down.
The first to be hit by the European glut would be U.S. LNG producers, according to Natural Gas Intel, if they can redirect the gas to the domestic market, which is also in an excess supply situation.
The situation for U.S. LNG producers specifically is made additionally complicated by China’s still standing 25-percent tariff on LNG imports from the U.S. Reuters last week quoted Freeport LNG’s chief executive Michael Smith as saying local producers could not afford to sell their LNG to a country that has a 25-percent tariff on the commodity.
Smith was commenting on the fact that China has restarted negotiations with U.S. LNG producers regarding future LNG purchases under the Phase 1 trade deal Beijing inked with Washington earlier this month. Under that deal, China undertook to buy an additional $18.5 billion worth of U.S. energy products but with the 25-percent tariff on LNG still active, LNG might not end up among these energy products.
“Importantly, should mild weather or stronger than expected LNG deliveries in NW Europe contin
Wouldn't come amiss
Hey all, just a quick message to remind all SH's to put in favourable feedback to daera before the PC closes on the 7th. It's not just the nimbys that can give their views, we can too!
Nice find Nobby!
https://timera-energy.com/lng-oversupply-its-impact-on-europe/
Buyers paying higher price all the time
0.315p, 0.31745p, 0.319p, 0.322p and the last one 0.324p for the 2M purchase
Next six weeks so mid March onwards I think
Gone to 0.32p bid, must be a large Buy trade reported later ( delayed )
With EU funds iminent, may see a bounce especially if riverfort paid off imho.
Master ,yes steady atm ,maybe there might be a short pull back butvimho with news anticipated by April this will stay within a range perhaps till mid March then you may see some movement just my opinion of coarse
0.3225p +0.0525p
Continuing with the buying of last Friday after a small retracement earlier in the week. Good volume 19M on 1 hour of trading.
Now that we have theoretically Brexited, the status quo remains until the end of the year, as I understand it.
That gives us 11 months for the UK to get its arrs into gear to improve our storage facilities, as after the year end, we will no longer be able to Demand gas from the European network at times when the network is stressed.
Interestingly though, The Republic of Ireland will still be able to do this.
As the R of I can only demand gas through the British network, it would be hard for the EU to deny the British network sufficient pressure to do this!
Nevertheless, the renewed Political independence from the EU should allow Government the freedom for us to get on with the Islandmagee Gas Storage Project without the need to go through the EU procurement requirements.
We happen to know of an excellent shipyard in Belfast that could provide lots of new jobs to facilitate this.
What a stroke of luck that is!
SO Boris, please can you ensure that much-needed Energy Security, well-deserved jobs and Regional Assistance is winging its way to Belfast, so that we can get on with this?
Get the cheque book out.
Oh and a Warship order would be nice as well.
Thanks, Thomas13.
Extract from an e-mailI I received from the EU following my own enquiry received e-mail 29th January:
'The goal of this Action was to perform the Front End Engineering and Design (FEED) study for the Islandmagee Storage Facility and carry out the in situ downhole testing to determine the stress state of the Permian salt. The PCI 5.1.3 concerns the development of a salt cavity gas storage facility located in Larne (UK). More Information on the outcome of the Action will be published on the website of INEA shortly:
https://ec.europa.eu/inea/en/connecting-europe-facility/cef-energy/5.1.3-0036-uk-s-m-15 '
He said they have been assured the funds due are imminent. He had no explanation for the delay but was clearly frustrated with the situation.
Apparently INFA will not be informed the payment has been processed, this will simply appear on the EU website.
So the elusive EU funds are expected this month (February).
Was any explanation given for the non-arrival of the funds in September, given that John was so confident in his broadcast interview that payment would be made then?
We wipe the slate clean from here,
From a pi view 2019 was a diaster . There's no getting away from that.
The next 8 weeks for storage will define .
Looking forward to eu fund and ml
Raising a glass to you Tom, not a Nige fan .. but all INFA fans
Regardless .. cheers to all , Dry January ended tonight !
Hear, hear, Mr Triumph, we are raising a glass of English sparkling (none of that European rubbish) to celebrate the glorious future that awaits the UK (assuming the politicians don't fork it up...).
Ban
Many thanks have a good weekend.
Off to the pub now to raise a glass or six to our Nige the King of brexit.
Mr T
Ban. I agree, JW has certainly assembled a first class BOD, worthy of any successful main market listing with many multiples of the present SP. I cannot imagine the new recruits would have come onboard without the a similar vision.
I’m pleased other investors have found my notes of value.
MrTriumph, both the Chairman and new NED were present and introduced themselves. I have to say, I felt quite inferior when they were talking through their career and achievements - we are in good hands. They will have completed due diligence and scrutinised the business, particularly Clive, before taking the reigns.
Have a good weekend all.
Setanta
Well said and many thank to Ban a brilliant job. I am always extremely grateful to pi's who put themselves out to attend these events and then give a full report to those who either could not or can't be bothered.
One question it may have been covered was our new Chairman present?
Mr T
Ban4118, for the clarification. I agree with your conclusion about the equity funding, ( "time will tell"!). You have done a remarkable job of reporting back here after the meeting. I did not expect a reply to my query so quickly as I thought you'd have had quite enough for one day. Double thanks, Double well done, and double go well.
Speedy, thanks for your thoughts on the shareholder value topic. I share your hopes and conclusions. Go well too.
Ban, great notes...thank you. Setanta, I echo your thoughts re: shareholder value, a theme JW has promoted vigorously especially to us LTHs, yet is still to deliver. Possibly the reason JW is now so keen to retain 100% equity in IM is to compensate for the huge dilution of last year? That would redeem the situation, would it not, compared to the much smaller percentage retained equity through the original funding proposal? Certainly the next few months will be very interesting waiting in the "last chance saloon" IMHO.