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"Natural Gas Trading Picks Up Considerably Amid High Volatility" by Charles Kennedy - ...And is U.S. NatGas Futures dramatically overbought at the $6.35 range?

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https://www.zerohedge.com/markets/eus-hope-rely-lng-weak-point-plan-wean-russian-gas

EU's Hope To Rely On LNG Is Weak Point In Plan To Wean Off Of Russian Gas

Tyler Durden's Photo
by Tyler Durden
Tuesday, Apr 19, 2022 - 10:51 AM

It has been a popular topic of discussion in national capitals from Rome to Budapest during recent months. Can the Washington-EU energy plan to supplant the Continent's reliance on Russian energy with products from other locales actually succeed? And if so, what's the timeline looking like?

At various times, we have illustrated how Europe has hoped to compensate for the loss of Russian sources with renewables, and why this approach was a fallacious one.

lng_europe.jpg?itok=6d0KQtBM

What's more, we have shown how European energy independence simply isn't possible, especially if they hope to maintain reasonable costs for oil and gas.

To be sure, while demand for Russian energy products has waned in Europe (thanks to executive fiat), the Europeans have paid Russia more than €20 billion for gas imports alone since the start of the year.

More recently, the European Commission has published an ambitious strategy - a plan to reduce the bloc’s reliance on Russian gas by the end of 2022. But in its latest lengthy analysis of Europe's energy situation, the EC program has perhaps inadvertently showed how difficult it would be for Europe to replace its Russian imports.

First, here's a diagram illustrating how each bloc member relies on Russia, and by how much.

eu_energy_one.jpg?itok=6vRiorLU

Source: FT

While Eastern and Northern European countries are the most dependent on Russian gas imports, countries in the western part of the bloc ar poised to eliminate their reliance on Russia because they import substantial supplies from Norway and other sources.

energy_one.jpg?itok=5PsrJX-C

Source: FT

Many EU nations also derive a large percentage of their oil and gas from domestic production.

eu_domesti%20.jpg?itok=JVA5bFe9

Source: FT

In total, the EU imported 155 billion cubic meters (bcm) of Russian gas in 2021. The Commission's proposal calls for cutting this amount by 2/3rds by the end of the year - a staggering sum.

To accomplish this, they would need to both reduce demand for energy while finding new sources (a difficult task since suppliers typically aren't too interested in new markets with low prospects for growth).

Here's a quick breakdown of what the FT sees as the most likely sources of new energy for Europe:

  • The single largest saving in the EU's plan comes from increasing imports of LNG, which the EU hopes could replace 50 bcm of Russian imports.

  • Another 10 bcm could be replaced by boosting gas pipeline imports from other trading partners, like Norway and Algeria.

  • Increased biomethane production, from sources such as food waste and manure, could replace 3.5 bcm.

  • In the residential sector, reliance on Russian gas could be reduced by 14 bcm if all households in the bloc turned down their thermostat by 1C.

  • What's more, they would need to accelerate the rollout of rooftop solar panels could reduce demand by another 2.5 bcm.

To succeed on the LNG target, the EU would also need to soak up most of the free LNG jangling around the international market.

lng_eu.jpg?itok=4g70U87C

Source: FT

The EU is pinning its hopes on imports from Qatar, the US, Egypt and West Africa. The US has pledged to boost LNG shipments to Europe by 15 bcm this year. However, many LNG producers sell the fuel under long-term contracts, with a preference for fast-growing Asia. Just over 50 bcm of global LNG supply is available to go to Europe - and that's a maximum number based on ICIS data.

Finally, as Biden promises away America's LNG to 'save Europe', bear in mind that US NatGas is now trading above $8 for the first time since 2008. This is the highest price for Henry Hub NG for this time of year ever (aside from 2006 and 2008) and 2022 has seen Henry Hub prices soar at the fastest pace on record (surging since Europe's imports exploded)...

2022-04-19_07-48-19.jpg?itok=rF12H6pF

For context, US NatGas is now trading at an equivalent oil barrel price of $136 - dramatically more expensive than the actual WTI crude price which is behind the soaring pump prices that the Biden administration is so aggressively trying to tamp down in the face of collapsing approval numbers.

2022-04-18_09-56-43_1.jpg?itok=RoW8SROJ

Is the average American willing to pay multi-decade highs for their heating bills, so that Germans can benefit? We guess we will see in the Midterms.

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(edited)

US natural gas futures traded around $7.1 per million British thermal units after a rally sent the contract to an over thirteen-year high of $8.065 at the start of the week, on the back of a rare, late-season blast of heavy snow. The snow blast hit mostly northeastern states, hence its name “Nor’easter”, with upstate NY seeing as much as 20 inches of snow. The unexpected blizzard should boost heating demand and further slow the pace of the storage injection season, after the latest weekly inventory report showed the gap between current stocks and the 5-year average widened to 17.8%. At the same time, the US is sending LNG cargoes at record levels, mostly to Europe, as the region scrambles to replace Russian gas. On the downside, natural gas output in China is soaring after Beijing pressured state-owned producers to ramp up production, in a bid to cut LNG imports, which have already fallen 11% over the first quarter.

 
NYSEArca - Nasdaq Real Time Price. Currency in USD

ProShares UltraShort Bloomberg Natural Gas (KOLD)

9.17+1.24    (+15.64%)
Edited by Tom Nolan

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https://oilprice.com/Energy/Energy-General/Demand-Destruction-Fears-Drag-Oil-And-Gas-Prices-Lower.html

Demand Destruction Fears Drag Oil And Gas Prices Lower

By Josh Owens - Apr 19, 2022, 2:00 PM CDT

EXCERPTS

e4b85df3-cb70-6fba-485a-7032b9c552c1.jpg

- US cash natural gas prices for next-day deliveries have soared this week, with many locations trading above $7 per mmBtu for the first time since the Big Freeze in February 2021.

- The Henry Hub May ‘22 contract has been on the rise recently, settling at $7.82 per mmBtu on Monday, though a downwards correction on Tuesday brought trading closer to $7 per mmBtu.

- The peculiarity of the gas price spike is that demand is expected to be easing over the next seven days and production remains stagnant at 93.4 BCf per day. 

- With domestic coal supplies remaining tight, disallowing any large-scale fuel switching, the longevity of the bull run will largely depend on LNG outflows from the US. 

US NatGas Falls Back After Hitting 2008 Levels. Natural gas prices hit levels not seen since 2008 due to counter-seasonally cold weather across the mid-continent and still-strong LNG send-outs. On Tuesday morning, however, natural gas pulled back as traders took profits.

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Fairly simple rule of thumb here, as the dollar tanks too new lows investors are hedging in oil, gas, gold, silver....etc. Thus the rise of commodities in general. Inflation is a bitch!!

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https://oilprice.com/Energy/Energy-General/The-Problem-With-Americas-LNG-Boom.html

The Problem With America’s LNG Boom

By Tsvetana Paraskova - Apr 19, 2022, 7:00 PM CDT

  • Europe is desperate to replace Russian gas, which has driven the U.S. to export as much LNG as it possibly can.
  • 12 new LNG projects in the U.S. have already been approved, but they are unlikely to all be completed due to long-term uncertainty.
  • While Europe is currently desperate for natural gas, its long-term goal is to move away from fossil fuels, which means some of these projects aren’t economically viable.

America’s liquefied natural gas (LNG) exports are booming amid a global energy crisis and a European drive to wean itself off Russian gas. U.S. shipments of natural gas have jumped to all-time highs this year as the United States is intent on helping Europe cut its dependence on Putin’s gas.  As demand for natural gas grows, export facilities along the U.S. Gulf Coast are operating at capacity and cannot ship more LNG than they are currently doing—at least not now.  

Many projects for LNG export plants are under consideration or are already approved by authorities but awaiting final investment decisions (FIDs). While current LNG demand, especially in Europe, remains strong and is likely to draw cargoes that would have typically gone to Asia, Europe’s push to free itself from Russian gas includes reducing gas use in the long term and doubling down on renewables to reach its climate neutrality goal by 2050. 

This is hardly good news for American LNG developers, who need long-term supply commitments and purchase agreements for decades in order to raise investments for the multi-billion projects that take years to build.

Environmental concerns about the greenhouse gas emissions of the LNG supply chain, from fracking to methane leaks, could also put a limit on the amount of LNG America will be able to send to Europe a decade or two from now.  

U.S. LNG Exports Booming

Right now, U.S. LNG exports are booming, and most are going to Europe, where the prices are the highest and demand is the strongest. Amid the energy crisis that began last autumn, LNG demand was high in Europe even before the Russian invasion of Ukraine. After the war started, however, demand went off the charts as the European Union vowed to reduce EU demand for Russian gas by two-thirds before the end of the year. 

U.S. LNG exports hit a record high in January, according to the latest EIA data. In February, exports decreased by 10.5 percent from January 2022 but jumped by 51.9 percent compared to February 2021, the Department of Energy’s latest LNG Monthly showed. The top five countries of destination, representing 57.5 percent of total U.S. LNG exports in February 2022, were Turkey, France, Spain, the Netherlands, and South Korea. The top Asian buyer of U.S. LNG in February came only fifth behind destinations in Europe and the Mediterranean. 

The U.S. is already on course to have the largest LNG export capacity in the world, ahead of Australia and Qatar, with the first cargo produced at Calcasieu Pass LNG in Cameron, Louisiana, having departed from Venture Global LNG’s newly-commissioned facility last month. 

Related: U.S. Exports Oil From SPR Release: Report

LNG export plants are running at capacity in the U.S., so there is little room for increased shipments. To secure more American LNG, Europe must rely on cargoes being redirected from Asia due to the higher prices in Europe and the EU’s motivation to replace as much Russian supply as it can as soon as possible. This is happening right now since many price-sensitive buyers in Asia are backing out of the spot market. 

Not All Proposed LNG Projects May See The Light Of Day

While the EU’s determination to ditch Russian gas and the EU-U.S. deal for more American LNG shipments have made some U.S. developers more upbeat on the future of their projects, not all of the more than a dozen proposed export facilities will see the light of day, analysts say. 

Facilities need to lock in long-term purchase deals to secure the viability of the expensive projects, and while deal-signing with China has accelerated in recent months, Europe’s long-term energy policy remains rooted in the idea of reducing gas use by 30 percent by 2030 to reach climate goals.  

In the United States, there are a dozen projects approved by the Federal Energy Regulatory Commission (FERC) but not under construction yet as they need a final investment decision, investors, or long-term customers. Another six projects have been proposed to FERC, and two others are in the pre-filing stage.  

“Having European customers, especially if supported by public money, could easily create a huge tranche of LNG supply,” Nikos Tsafos, a James R. Schlesinger Chair in Energy and Geopolitics at the Center for Strategic and International Studies, wrote last month. 

However, it takes up to five years to build a new project, and all new projects are planned with a 20-year investment horizon and firm sale contracts of up to 20 years. 

“For a European company that wants to be aligned with the continent’s target for climate neutrality by 2050, these time scales present a problem. A European customer might want gas in 2025 or 2030, but not in 2040 and likely not by 2045. This mismatch prevents U.S. LNG projects from moving forward with European help,” Tsafos noted. 

“There’s a big customer out there that wants LNG, but you’re not quite sure for how long,” Tsafos told the Financial Times this month.  

Europe wants a lot of non-Russian gas now, but, ideally, it wants to not want an increased gas supply a decade or two from now. The U.S., for its part, cannot currently ship more LNG than it is already doing as its operating export facilities are maxed out. For future projects, Europe’s 2050 net-zero goal and a push to reduce gas use overall is not good news for U.S. developers looking at long-term purchase deals and investments to bring their plans to operating projects. 

“I wish I had better news for Europe but it’s going to take...at least five-plus years to get anything of size done,” Jack Fusco, president and CEO of the leading U.S. LNG exporter, Cheniere Energy, told FT. 

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

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https://www.zerohedge.com/commodities/us-natgas-prices-sink-after-goldman-says-prices-likely-overshot

US Natgas Prices Sink After Goldman Says Prices "Likely Overshot" 

Tyler Durden's Photo
by Tyler Durden
Tuesday, Apr 19, 2022 - 02:06 PM

About two hours before U.S. natural gas surged to a 13-year high on Monday afternoon, breaking above $8 for the first time since 2008, Samantha Dart, head of natural gas research at Goldman Sachs, told clients that prices "likely overshot." 

Since Dart wrote the note titled "Tighter U.S. balances drive a higher risk premium, but market has likely overshot," natural gas futures have fallen more than 10% into a correction to around $7.03/mmBtu. From yesterday's high, prices plunged more than 13.55%. Perhaps Dart's note was instrumental in the selloff. 

Snag_14320350.png?itok=FsmrIfvk

Dart mentioned how prices had rallied nearly 40% month-to-date to $7.82/mmBtu as of writing the note on Monday morning. She said prices "have moved about $1/mmBtu" over "what current fundamentals justify." 

2022-04-19_13-42-52.png?itok=wfjEGYDJ

However, much of her note was concentrated on a "combination of tighter fundamentals and likely increased hedging by off-takers of US LNG." She pointed to ongoing tightness in the market due to the "reallocation of US LNG deliveries from Asia to Europe." She added, "tighter balances justify a higher risk premium vs. previously." 

Dart raised her Summer 2022/Winter 2022-23 natural gas price forecasts to $6.80/$5.60/mmBtu from $4.50/$5.15 previously, vs. forwards at $7.92/$7.91.

2022-04-19_13-44-18.png?itok=fxK1UYjM

Dart said the tightness in the market "helped exacerbate the Henry Hub rally beyond what we believe is fundamentally justified, at current price levels the U.S. gas market lacks supply and demand response mechanisms to force prices lower." She suggested the "current high-volatility environment is likely to persist for the next several months."

So now we know what Goldman Sachs believes is a justifiable level for natural gas prices; anything over $8/mmBtu is overvalued and value is around $6.82/mmBtu. Maybe this will be the new trading range for now. 

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4 hours ago, Tom Nolan said:

https://oilprice.com/Energy/Energy-General/The-Problem-With-Americas-LNG-Boom.html

The Problem With America’s LNG Boom

By Tsvetana Paraskova - Apr 19, 2022, 7:00 PM CDT

  • Europe is desperate to replace Russian gas, which has driven the U.S. to export as much LNG as it possibly can.
  • 12 new LNG projects in the U.S. have already been approved, but they are unlikely to all be completed due to long-term uncertainty.
  • While Europe is currently desperate for natural gas, its long-term goal is to move away from fossil fuels, which means some of these projects aren’t economically viable.

America’s liquefied natural gas (LNG) exports are booming amid a global energy crisis and a European drive to wean itself off Russian gas. U.S. shipments of natural gas have jumped to all-time highs this year as the United States is intent on helping Europe cut its dependence on Putin’s gas.  As demand for natural gas grows, export facilities along the U.S. Gulf Coast are operating at capacity and cannot ship more LNG than they are currently doing—at least not now.  

Many projects for LNG export plants are under consideration or are already approved by authorities but awaiting final investment decisions (FIDs). While current LNG demand, especially in Europe, remains strong and is likely to draw cargoes that would have typically gone to Asia, Europe’s push to free itself from Russian gas includes reducing gas use in the long term and doubling down on renewables to reach its climate neutrality goal by 2050. 

This is hardly good news for American LNG developers, who need long-term supply commitments and purchase agreements for decades in order to raise investments for the multi-billion projects that take years to build.

Environmental concerns about the greenhouse gas emissions of the LNG supply chain, from fracking to methane leaks, could also put a limit on the amount of LNG America will be able to send to Europe a decade or two from now.  

U.S. LNG Exports Booming

Right now, U.S. LNG exports are booming, and most are going to Europe, where the prices are the highest and demand is the strongest. Amid the energy crisis that began last autumn, LNG demand was high in Europe even before the Russian invasion of Ukraine. After the war started, however, demand went off the charts as the European Union vowed to reduce EU demand for Russian gas by two-thirds before the end of the year. 

U.S. LNG exports hit a record high in January, according to the latest EIA data. In February, exports decreased by 10.5 percent from January 2022 but jumped by 51.9 percent compared to February 2021, the Department of Energy’s latest LNG Monthly showed. The top five countries of destination, representing 57.5 percent of total U.S. LNG exports in February 2022, were Turkey, France, Spain, the Netherlands, and South Korea. The top Asian buyer of U.S. LNG in February came only fifth behind destinations in Europe and the Mediterranean. 

The U.S. is already on course to have the largest LNG export capacity in the world, ahead of Australia and Qatar, with the first cargo produced at Calcasieu Pass LNG in Cameron, Louisiana, having departed from Venture Global LNG’s newly-commissioned facility last month. 

Related: U.S. Exports Oil From SPR Release: Report

LNG export plants are running at capacity in the U.S., so there is little room for increased shipments. To secure more American LNG, Europe must rely on cargoes being redirected from Asia due to the higher prices in Europe and the EU’s motivation to replace as much Russian supply as it can as soon as possible. This is happening right now since many price-sensitive buyers in Asia are backing out of the spot market. 

Not All Proposed LNG Projects May See The Light Of Day

While the EU’s determination to ditch Russian gas and the EU-U.S. deal for more American LNG shipments have made some U.S. developers more upbeat on the future of their projects, not all of the more than a dozen proposed export facilities will see the light of day, analysts say. 

Facilities need to lock in long-term purchase deals to secure the viability of the expensive projects, and while deal-signing with China has accelerated in recent months, Europe’s long-term energy policy remains rooted in the idea of reducing gas use by 30 percent by 2030 to reach climate goals.  

In the United States, there are a dozen projects approved by the Federal Energy Regulatory Commission (FERC) but not under construction yet as they need a final investment decision, investors, or long-term customers. Another six projects have been proposed to FERC, and two others are in the pre-filing stage.  

“Having European customers, especially if supported by public money, could easily create a huge tranche of LNG supply,” Nikos Tsafos, a James R. Schlesinger Chair in Energy and Geopolitics at the Center for Strategic and International Studies, wrote last month. 

However, it takes up to five years to build a new project, and all new projects are planned with a 20-year investment horizon and firm sale contracts of up to 20 years. 

“For a European company that wants to be aligned with the continent’s target for climate neutrality by 2050, these time scales present a problem. A European customer might want gas in 2025 or 2030, but not in 2040 and likely not by 2045. This mismatch prevents U.S. LNG projects from moving forward with European help,” Tsafos noted. 

“There’s a big customer out there that wants LNG, but you’re not quite sure for how long,” Tsafos told the Financial Times this month.  

Europe wants a lot of non-Russian gas now, but, ideally, it wants to not want an increased gas supply a decade or two from now. The U.S., for its part, cannot currently ship more LNG than it is already doing as its operating export facilities are maxed out. For future projects, Europe’s 2050 net-zero goal and a push to reduce gas use overall is not good news for U.S. developers looking at long-term purchase deals and investments to bring their plans to operating projects. 

“I wish I had better news for Europe but it’s going to take...at least five-plus years to get anything of size done,” Jack Fusco, president and CEO of the leading U.S. LNG exporter, Cheniere Energy, told FT. 

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

This is a very good article.

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(edited)

4 hours ago, Tom Nolan said:

https://oilprice.com/Energy/Energy-General/The-Problem-With-Americas-LNG-Boom.html

The Problem With America’s LNG Boom

By Tsvetana Paraskova - Apr 19, 2022, 7:00 PM CDT

  • Europe is desperate to replace Russian gas, which has driven the U.S. to export as much LNG as it possibly can.
  • 12 new LNG projects in the U.S. have already been approved, but they are unlikely to all be completed due to long-term uncertainty.
  • While Europe is currently desperate for natural gas, its long-term goal is to move away from fossil fuels, which means some of these projects aren’t economically viable.

America’s liquefied natural gas (LNG) exports are booming amid a global energy crisis and a European drive to wean itself off Russian gas. U.S. shipments of natural gas have jumped to all-time highs this year as the United States is intent on helping Europe cut its dependence on Putin’s gas.  As demand for natural gas grows, export facilities along the U.S. Gulf Coast are operating at capacity and cannot ship more LNG than they are currently doing—at least not now.  

Many projects for LNG export plants are under consideration or are already approved by authorities but awaiting final investment decisions (FIDs). While current LNG demand, especially in Europe, remains strong and is likely to draw cargoes that would have typically gone to Asia, Europe’s push to free itself from Russian gas includes reducing gas use in the long term and doubling down on renewables to reach its climate neutrality goal by 2050. 

This is hardly good news for American LNG developers, who need long-term supply commitments and purchase agreements for decades in order to raise investments for the multi-billion projects that take years to build.

Environmental concerns about the greenhouse gas emissions of the LNG supply chain, from fracking to methane leaks, could also put a limit on the amount of LNG America will be able to send to Europe a decade or two from now.  

U.S. LNG Exports Booming

Right now, U.S. LNG exports are booming, and most are going to Europe, where the prices are the highest and demand is the strongest. Amid the energy crisis that began last autumn, LNG demand was high in Europe even before the Russian invasion of Ukraine. After the war started, however, demand went off the charts as the European Union vowed to reduce EU demand for Russian gas by two-thirds before the end of the year. 

U.S. LNG exports hit a record high in January, according to the latest EIA data. In February, exports decreased by 10.5 percent from January 2022 but jumped by 51.9 percent compared to February 2021, the Department of Energy’s latest LNG Monthly showed. The top five countries of destination, representing 57.5 percent of total U.S. LNG exports in February 2022, were Turkey, France, Spain, the Netherlands, and South Korea. The top Asian buyer of U.S. LNG in February came only fifth behind destinations in Europe and the Mediterranean. 

The U.S. is already on course to have the largest LNG export capacity in the world, ahead of Australia and Qatar, with the first cargo produced at Calcasieu Pass LNG in Cameron, Louisiana, having departed from Venture Global LNG’s newly-commissioned facility last month. 

Related: U.S. Exports Oil From SPR Release: Report

LNG export plants are running at capacity in the U.S., so there is little room for increased shipments. To secure more American LNG, Europe must rely on cargoes being redirected from Asia due to the higher prices in Europe and the EU’s motivation to replace as much Russian supply as it can as soon as possible. This is happening right now since many price-sensitive buyers in Asia are backing out of the spot market. 

Not All Proposed LNG Projects May See The Light Of Day

While the EU’s determination to ditch Russian gas and the EU-U.S. deal for more American LNG shipments have made some U.S. developers more upbeat on the future of their projects, not all of the more than a dozen proposed export facilities will see the light of day, analysts say. 

Facilities need to lock in long-term purchase deals to secure the viability of the expensive projects, and while deal-signing with China has accelerated in recent months, Europe’s long-term energy policy remains rooted in the idea of reducing gas use by 30 percent by 2030 to reach climate goals.  

In the United States, there are a dozen projects approved by the Federal Energy Regulatory Commission (FERC) but not under construction yet as they need a final investment decision, investors, or long-term customers. Another six projects have been proposed to FERC, and two others are in the pre-filing stage.  

“Having European customers, especially if supported by public money, could easily create a huge tranche of LNG supply,” Nikos Tsafos, a James R. Schlesinger Chair in Energy and Geopolitics at the Center for Strategic and International Studies, wrote last month. 

However, it takes up to five years to build a new project, and all new projects are planned with a 20-year investment horizon and firm sale contracts of up to 20 years. 

“For a European company that wants to be aligned with the continent’s target for climate neutrality by 2050, these time scales present a problem. A European customer might want gas in 2025 or 2030, but not in 2040 and likely not by 2045. This mismatch prevents U.S. LNG projects from moving forward with European help,” Tsafos noted. 

“There’s a big customer out there that wants LNG, but you’re not quite sure for how long,” Tsafos told the Financial Times this month.  

Europe wants a lot of non-Russian gas now, but, ideally, it wants to not want an increased gas supply a decade or two from now. The U.S., for its part, cannot currently ship more LNG than it is already doing as its operating export facilities are maxed out. For future projects, Europe’s 2050 net-zero goal and a push to reduce gas use overall is not good news for U.S. developers looking at long-term purchase deals and investments to bring their plans to operating projects. 

“I wish I had better news for Europe but it’s going to take...at least five-plus years to get anything of size done,” Jack Fusco, president and CEO of the leading U.S. LNG exporter, Cheniere Energy, told FT. 

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

The Problem With America's LNG Boom

Tyler Durden's Photo
by Tyler Durden
Wednesday, Apr 20, 2022 - 06:10 AM

By Tsvetana Paraskova of OilPrice.com

America’s liquefied natural gas (LNG) exports are booming amid a global energy crisis and a European drive to wean itself off Russian gas. U.S. shipments of natural gas have jumped to all-time highs this year as the United States is intent on helping Europe cut its dependence on Putin’s gas.  As demand for natural gas grows, export facilities along the U.S. Gulf Coast are operating at capacity and cannot ship more LNG than they are currently doing—at least not now.  

2022-04-19_qxrfhiaao8.jpg?itok=_9FPjJ2A

https://www.zerohedge.com/commodities/problem-americas-lng-boom

Edited by Tom Nolan

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It seems like the oultawing of natural gas hook ups and the mandatory conversion of existing hookups to electricity from natural gas will tell gas companies that future demand will decrease. This will cause them to plan for decreased future production, thus prices will rise long term.

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On 4/20/2022 at 5:38 PM, Itsover In2020 said:

The cure for high gas prices is higher gas prices.

This is only true in a fee market. It is not true where government inhibits production and discourages banks from lending money to oil companies.

Remember, our current government wants permanent high gas prices and the blame to go to Putin. If Ukraine is settled, current government will keep gas prices high blaming someone/something else.

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On 4/20/2022 at 5:46 AM, Tom Nolan said:

“For a European company that wants to be aligned with the continent’s target for climate neutrality by 2050, these time scales present a problem. A European customer might want gas in 2025 or 2030, but not in 2040 and likely not by 2045. This mismatch prevents U.S. LNG projects from moving forward with European help,” Tsafos noted. 

 

The same is true in the US where states and cities are outlawing natural gas hook ups in new homes and businesses and requiring retrofitting to electricity for current gas hook ups.

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https://oilprice.com/Energy/Natural-Gas/High-LNG-Prices-Are-Here-To-Stay.html

High LNG Prices Are Here To Stay

By Tsvetana Paraskova - Apr 24, 2022, 4:00 PM CDT

  • The global market for LNG has turned from a buyer’s market to a seller’s market.
  • The West’s push to diversify away from Russian gas has created a particularly tight LNG market.
  • The market is likely to remain tight for years to come, or at least until the completion of new LNG hubs in Qatar and the United States.

In just one year, the global market of liquefied natural gas (LNG) turned from a buyer’s market to a seller’s market, with LNG suppliers commanding a tight market as buyers scramble to secure gas from providers other than Russia. 

The European Union’s target to diversify gas supplies, speed up the roll-out of renewable gases, and replace gas in heating and power generation in hopes of cutting EU demand for Russian gas by two-thirds before the end of the year has created a global race for spot LNG supply. In this race for LNG supplies, Europe is currently winning over Asia, the traditional outlet for most of the global spot supply.   

This has not been the case for several months now, even before the Russian invasion of Ukraine, as Europe was plunged into an energy crisis in the autumn of 2021 with low levels of gas in storage and rebounding industry demand post-COVID. 

The Russian war in Ukraine and the determination of the EU to reduce its reliance on Russia’s gas—at around 40 percent pre-war—further made Europe the preferred destination of spot LNG cargoes, especially cargoes from the United States. 

Spot supply will not be able to cover current needs or replace a large portion of Russian supply because more than half of the global LNG trade is contracted under long-term agreements, leaving fewer spot cargoes with flexible destination terms. 

That’s why buyers are now looking to sign long-term contracts for LNG supply. It also is a way to hedge against skyrocketing spot prices.

And sellers rule the market. In this tight LNG market, which is set to become even tighter through the mid-2020s until major new capacity in the U.S. and Qatar comes online, LNG exporters, suppliers, and developers are demanding from future long-term buyers much higher prices for contracts, traders familiar with the negotiations tell Bloomberg.

The largest LNG suppliers are now offering buyers 10-year term contracts with a start date in 2023 at rates that are 75 percent higher than those for similar deals agreed upon only last year, Bloomberg’s sources say. 

The price of long-term LNG contracts is generally linked to the price of oil or Henry Hub prices and is lower than the near-record-high spot LNG prices. However, with demand skyrocketing as Europe races to replace Russia, the gap between long-term and spot LNG prices is narrowing. 

“There is anecdotal support – via industry channel checks – of increased appetite and discussions by European and Asian LNG buyers in recent weeks, looking to secure long-term LNG volumes and equity in LNG projects,” Saul Kavonic, Head of Australia Integrated Energy and Resources Securities Research at Credit Suisse, told Nick Toscano of Sydney Morning Herald at the end of March.

The Russian war in Ukraine and the West’s determination to wean off Russian gas—sooner rather than later—is the “most structural bullish event” in the history of the global LNG market, Kavonic said. 

According to Credit Suisse’s analyst, the war in Ukraine and its consequences on global gas flows would eclipse the previous major market shift and surge in LNG demand that resulted from Japan shuttering its nuclear power plants in the wake of the Fukushima disaster in 2011.   

“Ukraine could have more than 10 times the impact of Fukushima and last much longer,” Kavonic told Sydney Morning Herald. 

For example, Germany, which until two months ago had only sporadically thought of LNG import terminals and imports, now seeks a long-term deal with one of the world’s top LNG exporters, Qatar. 

The global race to procure LNG supply is bullish for U.S. developers and exporters, but with facilities maxed out, the United States can do little more in the short term to ease the tight market. In the longer term, environmental concerns about the greenhouse gas emissions of the LNG supply chain, from fracking to methane leaks, could put a limit on the amount of LNG America will be able to send to Europe a decade or two from now.  

Nevertheless, competition for LNG supply by 2025 will be fierce, due to the EU’s shift away from Russian fossil fuels.   

“With only modest volumes of new LNG supply coming onstream during this period and Europe’s decision to diversify away from Russia now irreversible, the stage is set for fierce competition,” Gavin Thompson, Vice Chairman, Energy – Asia Pacific, at Wood Mackenzie, said earlier this month.  

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

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https://finance.yahoo.com/news/dicey-long-term-natural-gas-040000307.html

Dicey Long-term Natural Gas Outlook Stifles LNG Investment

The talk around easing regulations to build LNG facilities is a welcome change but nowhere near enough, shipping and markets experts said during an April 21 webinar. That’s because how big projects are financed has also changed, and not necessarily for the better.

“A lot of the players are these small companies,” said Cara Striegold, risk manager at LNG terminal builder Bechtel Corp., during the Commodities People webinar. “They don’t have the Shell, the Exxon money. We see a lot of venture capital firms building these LNG terminals and that leads companies like ours to really be heavily involved with the banks, with the financing, putting together these deals. So, it’s been a very different market than what we saw, maybe 10 years ago, where it was the major corporations.”

That lack of a massive financial comfort level from the banks, as well as an arduous regulatory process, has scared a lot of people out of the market, Striegold said.

Fossil fuels’ future

The paradox is of a golden near-term opportunity for an infrastructure-dominated sector that must strategize for the long term.

Hanging over the entire LNG sector is the existential question of whether Russia’s invasion of Ukraine marks the beginning of the end for fossil fuels. Much of the energy crisis plaguing European countries can be attributed to a deliberate movement away from oil, gas and coal so as to reduce emissions as well as dependence on Russian energy. So, Striegold said, even if Europeans accept the burden of higher LNG prices, there is a limit to how much they can import. The problem stems from a lack of infrastructure investment for the intake of LNG.

“There’s back and forth when it comes to, do they develop that infrastructure over in Europe to accept more LNG capacity because the cost of it is a very long-term investment?” Striegold asked. “And, if you’re trying to get away from the fossil fuels … will banks invest in [fossil fuel infrastructure] and is that the correct long-term solution for a short term concern?”

The uncertainty extends to offtake agreements and shipbuilding decisions. Cheniere Energy’s Sabine Pass strategy rested on a sturdy foundation of 20-year contracts to provide LNG to reliable customers in Europe and Asia. Contracts of that length make executives nervous these days.

A 10-year deal is different. An executive signing a 10-year contract has a pretty good idea of what the market will be like 10 years from now, said Jason Freer, head of business intelligence or Poten and Partners. But no one wants to be locked into purchases of LNG for a future era with unknowable demand.

“That’s a real obstacle to developing new import infrastructure, export infrastructure,” Freer said. “When you build the ship, you’re building a 20-plus year asset. Can you use that asset 10 years from now? Fifteen, 20 years from now? It’s not to say that you can’t, but there is this question of what the world looks like 15-20 years from now.”

Working with banks

For its part, Bechtel is investing heavily in LNG projects, Striegold said. The company has an extensive presence along the U.S. Gulf Coast, including Tellurian’s massive Driftwood liquefaction plant and export terminal that just began construction. The company also built plants in Australia for the Asian market.

But that was in a different time.

“We have financing concerns when it comes to these LNG plants,” she said. “That’s what’s held us off on the Gulf Coast. It’s holding us off in Europe, too. Regulations might ease up a little but until there’s a push from the banks to invest in these projects, we’re not able to move forward at the pace that maybe the market demands at this point.”

The result is that Bechtel is stuck with many projects in the FEED stage, enduring a very long permitting process. The regulatory process is easing, Striegold acknowledged, but on a piecemeal basis followed by a prolonged stall. (“The talk is yes. The action has not come through yet.”)

She expects that the dicey long-term market outlook will compel a continuation of the near-term start-and-go construction pattern.

 

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EU Natural Gas Eases, Pre-War Level in Sight
EU natural gas futures trended lower, heading to €90 per megawatt-hour on Monday, not far from levels seen before the Russian invasion of Ukraine, as traders continued to monitor supplies and priced forecasts for cooler weather in the fortnight ahead. Volumes of Russian natural gas flowing through pipelines in Ukraine decreased after a brief gain and remained well below levels seen before Easter. On the other hand, shipments from Europe’s 2nd largest supplier Norway are set to increase as maintenance-related outages decreased but volumes still stood 10% below the average of March, according to operator Gassco AS. At the same time, the US has been shipping LNG cargoes at near record levels since the start of the year, mostly to Europe, due to higher premium over Asian clients in the spot market.

https://tradingeconomics.com/commodity/eu-natural-gas

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https://www.fxempire.com/forecasts/article/natural-gas-prices-rebound-following-last-weeks-slide-978951

-- Dave Becker --

Key Insights

  • Natural gas prices rebounded on Monday.
  • The weather is expected to be colder than usual.
  • Natural gas arrivals at export terminals remain strong.

Natural gas prices rebounded and closed higher after dropping, dropping 3.7% on Friday and falling 8.5% for the week. LNG exports rose in the latest week and LNG demand remains strong, and natural gas arrivals at LNG terminals continue to climb. The weather is expected to be colder than average for the next 2-weeks.

According to the EIA, U.S. LNG exports increase by six vessels this week from last week. Twenty-six LNG vessels with a combined LNG-carrying capacity of 97 Bcf departed the United States between April 14 and April 20. This report week had the highest number of export cargoes departing the United States since the week of February 3 to February 9, 2022.

Technical Analysis

Natural gas prices rose on Monday. Prices bounced near support at former resistance near the October highs at 6.46. Resistance is seen near the 10-day moving average at 6.97. Target resistance is seen near the April highs at 8.06.

Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal.

Medium-term momentum has negative. The MACD (moving average convergence divergence) generated a crossover sell signal. This scenario occurs when the MACD line (the 12-day moving average minus the 26-day moving average crosses below the MACD signal line (the 9-day moving average of the MACD line.

The MACD histogram is printing in negative territory with a declining trajectory which points to lower prices.

ng-042522.jpg?func=cover&q=70&width=700

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https://www.fxempire.com/forecasts/article/nat-gas-supported-by-lower-production-expectations-977785

Published: Apr 25, 2022

Nat Gas: Supported by Lower Production Expectations

EXCERPT

Gas Demand Expected to Slide

With milder weather coming, Refinitiv projected average U.S. gas demand, including exports, would slide from 92.4 bcfd this week to 90.5 bcfd next week, Reuters reported. Those forecasts were lower than Refinitiv’s outlook on Friday.

LNG Supply Issues Remain at Forefront

Reuters reported on Monday the amount of gas flowing to U.S. LNG export plants slid from a record 12.9 bcfd in March to 12.2 bcfd so far in April due mostly to declines at the Freeport LNG facility in Texas. The United States can turn about 13.2 bcfd of gas into LNG.

Since the United States will not be able to produce more LNG anytime soon, the country worked with allies to divert more LNG exports to Europe to help European Union countries and others break their dependence on Russian gas.

Russia, the world’s second biggest gas producer, provided about 30%-40% of Europe’s gas in 2021, totaling about 18.3 bcfd, according to Reuters.

The EU wants to cut Russian gas imports by two-thirds by the end of 2022 and refill stockpiles to 80% of capacity by November 1, 2022 and 90% by November 1 each year from 2023.

Short-Term Outlook

We could see a resumption of the uptrend following last week’s profit-taking induced setback. The catalyst will likely be the low U.S. production. However, gains could be capped by lower heating and cooling demand.

The major concern is if and when the U.S. will step up production. We’re not at the panic stage yet, but if it turns hot earlier than expected then prices could spike higher rather quickly.

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EU natural gas futures rose as much as 17% on Tuesday to above €100 per megawatt-hour mark after it was reported that Russia will halt gas deliveries to Poland tomorrow. Earlier in the day Polish energy adviser Naimski said PGNiG ( the Polish gas distributor) would not comply with a Russian request to pay for gas in rubles. Currently, 55 percent of Poland's gas imports come from Russia but Poland took already several steps to cut its reliance including the expansion of a terminal in Swinoujscie in northwestern Poland and building a new pipeline from Norway.

https://tradingeconomics.com/commodity/eu-natural-gas

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3 hours ago, Tom Nolan said:

EU natural gas futures rose as much as 17% on Tuesday to above €100 per megawatt-hour mark after it was reported that Russia will halt gas deliveries to Poland tomorrow. Earlier in the day Polish energy adviser Naimski said PGNiG ( the Polish gas distributor) would not comply with a Russian request to pay for gas in rubles. Currently, 55 percent of Poland's gas imports come from Russia but Poland took already several steps to cut its reliance including the expansion of a terminal in Swinoujscie in northwestern Poland and building a new pipeline from Norway.

https://tradingeconomics.com/commodity/eu-natural-gas

"The "Switch Off Putin" campaign, an immediate European-wide boycott of all Russian oil and gas imports" by James Corbett ...or..."The Greatest Trick of All"

https://www.zerohedge.com/energy/russia-halts-natural-gas-supplies-poland-european-energy-prices-spike-local-reports

Poland Confirms Russia To Halt All Gas Delivery Wednesday If Payment Not Settled In Rubles

Tyler Durden's Photo
by Tyler Durden
Tuesday, Apr 26, 2022 - 02:50 PM

Update(1550ET): The International Energy Agency (IEA) issued a statement of solidarity with Poland as Russia is poised to suspend all natural gas supplies to the country over Warsaw's refusal to settle payments in Rubles, as President Putin previously demanded of "unfriendly countries" taking anti-Kremlin action amid the Ukraine conflict.

"Gazprom's move to completely shut off gas supplies to Poland is yet another sign of Russia's politicization of existing agreements and will only accelerate European efforts to move away from Russian energy supplies," IEA executive director Fatih Birol said in a statement posted to social media.

This following on the heels of Polish Climate Minister Anna Moskwa, who oversees coordination of the country's energy needs and response to changing conditions, asserting that Poland is well prepared for such a scenario of Russia cutting off the taps...

"Poland has the necessary gas reserves and sources of supply that protect our security - we have been effectively independent from Russia for years. Our warehouses are 76% full. There will be no shortage of gas in Polish homes," she stressed. Meanwhile Gazprom has confirmed that by tomorrow the supplies will be halted, after already the Yamal-Europe pipeline reportedly stopped delivering, and also this...

GAZPROM TO HALT GAS SUPPLIES THROUGH BULGARIA APR 27: MINISTRY

russpipelines.png?itok=09hOAW5L

* * *

Update(1340ET): Following initial reports from Poland’s largest news portal Onet that Russian natural gas delivery to Poland had been suspended, Gazprom denied that it had at this point stopped flows. However, it quickly said that it will halt gas deliveries starting tomorrow. But at this point gas from Russia is not flowing via the Yamal pipeline, disrupting delivery to Germany...

2022-04-26_0.png?itok=KhEgBYv5

After the initial reports, which sent European gas princes exploding, Poland has confirmed that a suspension of gas is imminent if it doesn't agree to pay in Rubles. Bloomberg is now reporting, "Poland’s main gas distributor PGNiG says it was informed by Gazprom that starting from Wednesday at CET0800 all deliveries of natural gas will be halted."

And further, "PGNiG says will seek damages over breach of contract." The news comes after a reported crisis meeting of Poland’s Climate Ministry. Now it appears some final decisions must be made amid the ultimatum from Moscow.

A flurry of breaking headlines...

[Article continues with BACKSTORY]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 

 

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https://www.zerohedge.com/markets/four-european-gas-buyers-fold-russian-demands-pay-gas-rubles

Four European Gas Buyers Fold To Russian Demands, Pay For Gas In Rubles

Tyler Durden's Photo
by Tyler Durden
Wednesday, Apr 27, 2022 - 05:31 AM

It appears that Putin's gambit is working.

One day after Russia halted natgas supplies to Poland and Bulgaria due to "nonpayment in rubles", confirming that the country is willing to go ahead with its bluff and shut down supplies to "unfriendly" nations and sending European nat gas prices soaring, Bloomberg reports citing a person close to Russian gas giant Gazprom, that already Europe's fake united front is cracking as four European gas buyers have already paid for supplies in rubles as Russia demanded even as further cutoffs if others refuse the Kremlin’s requirement aren’t likely until the second half of May, when the next payments are due.

While it was unclear which are the four companies violating EU directives and paying directly in rubles, according to Reuters Germany' Uniper and Austrian OMV are among the companies that have folded to Kremlin' demands:

  • GERMAN UNIPER CO SAYS PAYMENT SCHEME FOR RUSSIAN GAS IN RUBLES DOES NOT CONTRADICT THE SANCTIONS AND IT IS POSSIBLE TO PAY IN RUBLES - OFFICIAL

  • AUSTRIA AND THE AUSTRIAN OMV HAS ACCEPTED THE TERMS OF PAYMENT FOR RUSSIAN GAS IN RUBLES - AUSTRIAN CHANCELLOR

Pro-Russian EU member Hungary, meanwhile, has struck a deal to pay into a euro-denominated account with Gazprombank, which in turn will deposit the amount in roubles to Gazprom Export, foreign minister Peter Szijjarto said in a video posted to Facebook. Its next payment is due on May 22, he said. Slovakia has reached the same agreement, he added as more of Europe realizes that it is impossible to live without Russian energy sources.

Separately, to facilitate their compliance with Russian demands (and ostensibly in breach of European sanctions), ten European companies have already opened the accounts at Gazprombank needed to meet President Vladimir Putin’s payment demands, the person said, speaking on condition of anonymity to discuss confidential matters.

As we reported yesterday, Russia halted gat supplies to Poland and Bulgaria on Wednesday after they refused Gazprom’s proposed mechanism for ruble payments, which the gas giant says does not violate European Union sanctions. Russia supplies gas via pipelines to 23 European countries. Moscow demanded that it be paid in rubles for nat gas shipments after the EU imposed sanctions on Russia over its invasion of Ukraine. However, the EU told member states that the mechanism the Kremlin proposed, which required opening euro and ruble accounts with state-controlled Gazprombank, would violate the sanctions. It appears that to at least 10 energy companies, complying with Russian demands to keep the gas flowing is more important than potentially pissing off some Eurocrats.

According to the FT, Gazprom Export notified Bulgargaz and PGNiG of the suspension of gas supplies from April 27 until payment is made in accordance with the decreed procedure, the company said. It warned that the unauthorised withdrawal of gas volumes transiting through Poland and Bulgaria to other European countries such as Germany would result in a reduction of transit supplies.

“Bulgaria and Poland are transit states,” Gazprom said. “In the event of unauthorized withdrawal of Russian gas from transit volumes to third countries, supplies for transit will be reduced by this volume.”

In response to the "unexpected" supply halts, which infuriated EU president Ursula von der Leyen, who today tweeted that "Gazprom's announcement is another attempt by Russia to blackmail us with gas" adding that Europe is "prepared for this scenario" although judging by the scramble by several energy companies to pay in rubles that is not really true...

[TWITTER statement by Ursula von der Leyen]

... European gas prices rose by 20% on Wednesday. Futures contracts tracking Europe’s wholesale gas price advanced almost by a fifth at €117 per megawatt hour in early trading. Prices are almost seven times higher than a year ago.

“Gazprom has completely suspended gas supplies to Bulgargaz (Bulgaria) and PGNiG (Poland) due to non-payment in roubles,” Gazprom said in a statement on Wednesday.

While we already know that at least a handful of European energy buyers folded to Russian demands, multiple European buyers have refused to pay in roubles (for now), saying it contradicted contract terms and would be a way to bypass EU sanctions on the Russian central bank.

“Politically, this raises the stakes for the EU Commission’s decision on whether the new payment system would violate sanctions and, hence, will probably keep market volatility elevated,” said Goldman Sachs analyst Samantha Dart in a note to clients. She also added that it is Goldman's "view that it is in the interest of both the EU and Russia to work out a solution that brings gas payments in compliance with the EU's legal requirements, consistent with recent comments from Brussels."

Today's events can work as an added incentive for the EU, and especially Germany, to find a way to work out a RUB payment mechanism given the significant economic toll a halt in gas flows would have in the region, which would be much greater than that of Poland or Bulgaria.

Well, it appears that in lieu of a political resolution, at least some companies are taking matters into their own hands, a development which will either escalate tensions further and lead to even more draconian measures, as the following Reuters quotes suggests:

  • WESTERN OFFICIALS SAY RUSSIA DECISION TO HALT GAS TO POLAND, BULGARIA IS LIKELY TO BE COUNTERPRODUCTIVE AS IT DEMONSTRATES WHY DEPENDENCE ON RUSSIA MAKES COUNTRIES VULNERABLE TO COERCION

... or force Europe to realize that full sanctions of Russian energy are impossible and force politicians to find loopholes, as this next Reuters headline signals:

  • EU WILL TEMPORARILY INCREASE GAS PURCHASES FROM THE RUSSIAN FEDERATION THROUGH COUNTRIES READY TO PAY IN RUBLES TO COMPENSATE FOR THE CESSATION OF SUPPLIES TO POLAND AND BULGARIA - TASS SOURCE

To be sure, in a worst case scenario, Goldman warns that "a full interruption of Russian flows to Germany would potentially lift European gas prices to over 200 EUR/MWh this summer."

Given all of this, it appears the Ruble is no longer "rubble" after all, trading at 6-month highs versus the dollar...

2022-04-27_03-46-56.jpg?itok=aFlmADvX

And near two-year highs against the euro...

2022-04-27_03-48-35.jpg?itok=mdFBlW6G

Just remember, Janet Yellen said this was all manipulation and told you that "you should not infer anything" from the value of the ruble.

 

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https://oilprice.com/Energy/Natural-Gas/German-Energy-Giant-To-Pay-For-Russian-Gas-In-Rubles.html

German Energy Giant To Pay For Russian Gas In Rubles

By Irina Slav - Apr 28, 2022, 10:00 AM CDT

  • Uniper set to pay for Russian gas imports in Rubles.
  • Uniper's move comes despite calls from the European Commission to EU energy buyers to not pay for Russian gas in rubles.

Germany's power utility Uniper—one of Germany's largest gas importers—will pay for Russian gas deliveries in rubles in accordance with the new payment procedure announced by Russia last month.

"The plan is to make our payments in euros to an account in Russia," a company spokesperson told German media, as cited by Reuters.

Per the procedure, any buyer of Russian gas from any unfriendly country needs to open two accounts in Gazprombank: one in the foreign currency it wants to pay in and one in rubles.

When a gas payment is due, the buyer deposits the necessary sum in dollars or euros in its first Gazprombank account. The bank then converts the sum into rubles under Russian central bank exchange rates and deposits it in the second account, from which the actual payment is made.

Uniper said earlier this week it was prepared to begin paying in rubles for Russian gas, soon after Gazprom informed Poland and Bulgaria that it would suspend gas deliveries to them following their refusal to pay for the gas in rubles.

The Bulgarian state gas company said that it had found problems in the terms of the new procedure that put the security of gas deliveries in doubt. Uniper, on the other hand, does not seem to have such misgivings. It also does not share EU officials' concern about the switch to rubles possibly breaching sanctions.

"We consider that the amendment of the payment process complies with the sanctions law and so the payments are possible," said the chief financial officer of the energy company, Tiina Tuomela, this week.

Uniper's move comes despite calls from the European Commission to EU energy buyers to not pay for Russian gas in rubles.

"Companies with such contracts should not accede to the Russian demands," EC president von der Leyen said this week, as quoted by Al Jazeera. "This would be a breach of the sanctions so a high risk for the companies."

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Latest articles from Irina Slav

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https://finance.yahoo.com/news/several-european-traders-started-pay-114740538.html

REUTERS - Thursday April 28th

Several European traders have started to pay for Russian gas in roubles - sources

  •  
     
     
  •  
 
Thu, April 28, 2022, 6:47 AM·2 min read
 
 
a2639055d7b2919b6101e86e7e9da458
 
FILE PHOTO: A pressure gauge is pictured at a Gaz-System gas compressor station in Rembelszczyzna outside Warsaw

(Reuters) - Some European traders have started to pay Russia for gas sales in roubles, while large clients have yet to do so, two sources familiar with the matter told Reuters on Thursday.

"Several traders, maybe more than five, have started payments," one source said on condition of anonymity because they were not authorised to speak to the media.

Russian President Vladimir Putin has demanded that countries he terms "unfriendly" must pay for gas in roubles or be cut off.

Under the new Russian payment system, buyers are obliged to deposit euros or dollars into an account at Gazprombank, which has then to convert them into roubles, place the proceeds in another account owned by the foreign buyer and transfer the payment in Russian currency to Gazprom.

The scheme was designed as a response to sweeping Western sanctions against Russia following the start of what Moscow calls its "special military operation" in Ukraine.

Gazprom and Gazprombank did not respond to requests for comment on Thursday.

The European Commission has accused Moscow of blackmail over its demand to be paid in roubles but in an advisory note issued last week, the Commission said buyers of Russian gas could participate in the scheme if they could confirm payment was complete once they had deposited euros, as opposed to later when the euros were converted to roubles.

Russia cut off gas supplies to Poland and Bulgaria on Wednesday after they refused to pay in roubles under the new arrangement stipulated by Putin. [L2N2WP1MN]

A senior European Union official said on Thursday that Poland and Bulgaria both used their existing method to pay for Russian gas before Moscow cut their gas supplies, and the countries did not comply with Moscow's proposed mechanism to pay in roubles.

The Kremlin has said payments for deliveries that took place after Putin's decree took effect were expected in May. A source named May 20 as "validation" date for payments.

There have been mixed signals from Gazprom's top consumers of gas about the rouble scheme of payments.

Three sources said on Thursday that Italian energy group Eni has yet to make a decision regarding the payment scheme Russia has introduced and is waiting for clarity on whether it amounts to a breach of sanctions.

Uniper, Germany's main importer of Russian gas, said on Monday it would be possible to pay for future supplies without breaching European Union sanctions. However, it later said that no decision had been made.

Hungary has said it plans to pay for Russian gas in euros through Gazprombank, which will convert the payment into roubles to meet the new requirement.

(Reporting by Reuters; editing by David Evans)

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BULGARIA - GREECE

https://www.yahoo.com/news/gas-pipeline-boosts-europes-bid-063706779.html

New gas pipeline boosts Europe's bid to ease Russian supply

ATHENS, Greece (AP) — Mountainous and remote, the Greek-Bulgaria border once formed the southern corner of the Iron Curtain. Today, it’s where the European Union is redrawing the region’s energy map to ease its heavy reliance on Russian natural gas.

A new pipeline — built during the COVID-19 pandemic, tested and due to start commercial operation in June — would ensure that large volumes of gas flow between the two countries in both directions to generate electricity, fuel industry and heat homes.

The energy link takes on greater importance following Moscow’s decision this week to cut off natural gas supplies to Poland and Bulgaria over a demand for payments in rubles stemming from Western sanctions over the war of Ukraine.

The 180-kilometer (110-mile) pipeline project is the first of several planned gas interconnectors that would give eastern European Union members and countries hoping to join the 27-nation bloc access to the global gas market.

In the short term, it’s Bulgaria’s backup.

The new pipeline connection, called the Gas Interconnector Greece-Bulgaria, will give the country access to ports in neighboring Greece that are importing liquefied natural gas, or LNG, and also will bring gas from Azerbaijan through a new pipeline system that ends in Italy.

It's one of many efforts as EU members scramble to edit their energy mixes, with some reverting back to emissions-heavy coal while also planning expanded output from renewables.

Germany, the world’s biggest buyer of Russian energy, is looking to build LNG import terminals that would take years. Italy, another top Russian gas importer, has reached deals with Algeria, Azerbaijan, Angola and Congo for gas supplies.

The European Union wants to reduce its dependence on Russian oil and gas by two-thirds this year and to eliminate it completely over five years through alternative sources, the use of wind and solar power, and conservation.

Russia's invasion of Ukraine is likely to accelerate changes in the EU’s long-term strategy as the bloc adapts to energy that is more expensive but also more integrated among member nations, said Simone Tagliapietra, an energy expert at the Brussels-based think tank Bruegel.

“It’s a new world,” he said. “And in this new world, it’s clear that Russia doesn’t want to be part of an international order as we think of it.”

Tagliapietra added: “The strategy — particularly by Germany — over the last 50 years was always one of engaging with Russia on energy. ... But given what we are seeing in Ukraine and given Russia’s view of international relations, it’s not the kind of country with which we would like to do business.”

EU policymakers argue that while Eastern European members are among the most dependent on Russian gas, the size of their markets makes the problem manageable. Bulgaria imported 90% of its gas from Russia but only consumes 3 billion cubic meters annually — 30 times less than lead consumer Germany, according to 2020 data from EU statistics agency Eurostat.

The Greece-Bulgaria pipeline will complement the existing European network, much of which dates to the Soviet era, when Moscow sought badly needed funds for its faltering economy and Western suppliers to help build its pipelines.

The link will run between the northeastern Greek city of Komotini and Stara Zagora, in central Bulgaria, and will give Bulgaria and neighbors with new grid connections access to the expanding global gas market.

That includes a connection with the newly built Trans Adriatic Pipeline, which carries gas from Azerbaijan, and suppliers of liquefied natural gas that arrives by ship, likely to include Qatar, Algeria and the United States.

As many as eight additional interconnectors could be built in Eastern Europe, reaching as far as Ukraine and Austria.

The 240 million-euro ($250 million) pipeline will carry 3 billion cubic meters of gas per year, with an option to be expanded to 5 billion. It received funding from Bulgaria, Greece and the EU, and has strong political support from Brussels and the United States.

On the ground, the project faced multiple holdups because of supply chain snags during the COVID-19 pandemic.

Receiving specialized parts and moving personnel after construction got underway in early 2020 soon became increasingly difficult, said Antonis Mitzalis, executive director of Greek contractor AVAX, which oversaw the project.

Construction of the pipeline finished in early April, he said, while work and testing at two metering stations and software installation are in the final stages.

“We had a sequence in mind. But the fact that some materials did not arrive made us rework that sequence, sometimes with a cost effect,” Mitzalis said.

Greek Prime Minister Kyriakos Mitsotakis missed a tour of the site last month after contracting COVID-19. He spoke Wednesday with his Bulgarian counterpart, Kiril Petkov, to provide assurances of Greek support.

“Bulgaria and Greece will continue to work together for energy security and diversification — of strategic importance for both countries and the region,” Petkov later tweeted. “We both are confident for the successful completion of the IGB on time.” ___

Follow AP's coverage of the war in Ukraine: https://apnews.com/hub/russia-ukraine

___ Follow Gatopoulos at https://twitter.com/dgatopoulos

 

 

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https://oilprice.com/Energy/Natural-Gas/The-UK-Could-Give-Up-Russian-Gas-Sooner-Than-Thought.html

The UK Could Give Up Russian Gas Sooner Than Thought

By Irina Slav - Apr 28, 2022, 5:00 PM CDT

  • The European Union is debating energy embargos on Russia, with natural gas as one of the key talking points.
  • Russia is ramping up threats to cut Europe’s gas if it does not comply with its demands.
  • The UK is predicting that it can leave Russian gas behind earlier than previously anticipated.

In the week when Gazprom finally did what Europe was afraid it would do and started cutting off gas supplies to countries unwilling to pay for them in rubles, Russian gas reliance has really hit the spotlight. And at least one country in Europe believes it can eliminate its dependence on it sooner than previously believed. Bloomberg reported earlier this week that the UK could stop importing Russian natural gas before this year’s end. Citing an unnamed source familiar with the government’s plans, the report noted that Russian gas exports to the UK were already a slim enough portion of total gas imports to make the phase-out possible.

Details on how exactly the government planned to eliminate these imports were not divulged, but given the fact that Russian gas last year accounted for just 4 percent of total UK gas imports, replacing Russia with another supplier will be nowhere near as challenging as the same exercise would be for Germany.

What’s more, Russian LNG cargos—the only form of Russian gas that the UK imports—arriving in the country have fallen further since the start of this year, reinforcing Downing Street’s conviction that the UK can get rid of Russian gas with almost no hassle.

This puts the UK in a comfortable enough virtue-signaling position, from which it can urge its EU allies to reduce their own reliance on Russian gas. These allies, however, will have a harder time following in the UK’s footsteps, with Germany being the most notoriously gas-dependent European economy.

Related: U.S. Recession Fears May Be Overblown

The EU has been discussing energy embargos on Russia for weeks now and has so far only managed to agree on a coal import ban, which will enter into effect from August. This will allow utilities to stock up on the fossil fuel in the meantime.

A gas embargo has also been on the table, but several EU members have voiced strong opposition to the idea. In Germany, businesses and trade unions have joined forces to advise against such an embargo, noting it would devastate the energy-intensive German economy. An oil embargo is an equally hard sell for Germany.

Europe, as a whole, imports some 40 percent of the gas it consumes from Russia. Last year, this amounted to around 155 billion cubic meters. This year, because of the war in Ukraine, the EU has stated it will aim to reduce its intake of Russian gas by two-thirds by the end of the year, using a variety of measures, including a switch to LNG, energy conservation, a buildout in renewables, and increasing the use of coal for power generation.

Meanwhile, however, gas prices soared again this week after Gazprom cut off gas deliveries to Poland and Bulgaria. The president of the European Commission, Ursula von der Leyen, has called on European energy traders not to pay for Russian gas in rubles. Germany’s Uniper, however, has said it had no problem doing just that. Hungary and Austria have also said they would pay for Russian gas in rubles.

The asynchrony between Brussels and the business world has once again highlighted the drawbacks of energy dependence and the importance of local supply. The UK’s relative ease of reducing Russian oil imports also speaks to the latter.

This doesn’t mean that the UK is problem-free and an example for the EU to follow, however. Last month, energy industry association Offshore Energies UK warned that the country’s gas producers were struggling to increase output, which could threaten the security of supply. This, the association said, could result in the UK becoming dependent on imports for as much as 70-80 percent of its consumption in the future.

By Irina Slav for Oilprice.com

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https://oilprice.com/Energy/Natural-Gas/LNG-Terminals-In-Europe-Are-Filling-Up-Fast.html

LNG Terminals In Europe Are Filling Up Fast

By Tsvetana Paraskova - Apr 30, 2022, 6:00 PM CDT

  • Europe’s LNG terminals are maxed out as the region continues to import record amounts of gas.
  • Europe is likely to import even more LNG in the coming years to displace as much Russian gas as possible.
  • As a result of the EU’s new energy policy, natural gas and LNG prices are expected to remain elevated for years to come.

Europe is importing record volumes of liquefied natural gas (LNG) as it looks to cut as much Russian gas consumption as soon as possible. Unlike in previous years, Europe is now the most attractive destination for global LNG flows, outbidding Asia for spot supply as prices and demand in Europe have soared after the EU’s irreversible decision to stop being beholden to Putin for its gas consumption as fast as feasible.  Amid soaring demand, however, LNG terminals in Europe are maxed out, limiting how many cargoes the continent can import now before planned new import and regasification terminals can be built and brought online. This has prompted suppliers keen on growing their LNG exports to Europe to offer cargoes at discounts of up to 20 percent to the prices at the Dutch TTF hub, the benchmark gas price for Europe, in order to secure slots at import terminals, traders tell Bloomberg.

Europe’s record LNG imports mitigated the gas price action after Russia halted gas deliveries to EU members Poland and Bulgaria earlier this week. After jumping by as much as 24% on Wednesday morning when Bulgaria and Poland said their Russian gas supply had been cut off, natural gas prices in Europe pared gains later in the day and even eased on the following day. This was largely due to continued high LNG imports, the EU’s vow to help affected member states, and significantly improved storage levels at the end of the winter heating season. 

Related: Libya May Reach Full Oil Production Within Days

LNG exporters are now focused on Europe as a key import market and are reportedly willing to offer discounts now in order to win more customers in the future, as the EU looks to ditch Russia as a supplier as soon as it can afford it without causing a recession. 

Even before the Russian invasion of Ukraine, Europe was plunged into an energy crisis in the autumn of 2021, with low levels of gas in storage and rebounding industry demand post-COVID. The war in Ukraine made Europe rethink its energy strategy, and the European Union has now drafted plans to cut EU demand for Russian gas by two-thirds before the end of 2022 and completely by 2030, possibly by 2027. 

Strong LNG demand in Europe while China grapples with fresh COVID-related lockdowns suggests that Europe will continue to be the preferred destination of spot LNG cargoes at least this year and next. The EU will seek to replenish gas in storage levels before next winter so it will be more prepared if—or rather when—Russia decides to halt gas flows to more EU customers, as it already did with Poland and Bulgaria. 

Europe will also look to import more LNG in coming years to displace as much Russian gas—which met 40 percent of EU consumption pre-war—as soon as possible. One of the most dependent large economies, actually the biggest economy in Europe, Germany, plans to build two LNG import facilities; one at Brunsbuettel and one at Wilhelmshaven. Germany doesn’t currently have any LNG import terminals. In March, German LNG Terminal and Shell signed an agreement under which the supermajor will make a long-term booking of a substantial part of the Brunsbuettel terminal’s capacity for importing LNG.  

Germany, which until two months ago had only sporadically thought of LNG import terminals and imports, now seeks a long-term deal with one of the world’s top LNG exporters, Qatar.  

As a result of the EU’s new energy policy, natural gas and LNG prices are expected to remain elevated for years to come.  

“Gas prices will remain high until 2026 at least. Europe wants to rapidly minimize the 150 Bcm of Russian imports that meet about one-third of its demand. There’s nowhere near enough alternative gas supply available for the next four years until new volumes of LNG from the US and Qatar become available,” Simon Flowers, chairman, and chief analyst at Wood Mackenzie said this week. 

“Meanwhile, for Europe, it’s about maximizing pipeline imports from Norway, Azerbaijan, and North Africa; outcompeting Asia for flexible LNG; and managing demand. Throughout this period, Russia has leverage and can manipulate volumes; after 2026, prices should ease,” Flowers noted. 

By Tsvetana Paraskova for Oilprice.com

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