Russia (bbabo.net), - Record deliveries of American liquefied natural gas (LNG) to Europe are explained by exceptionally favorable economic conditions. The United States remains, perhaps, the only gas exporting country that still benefits from the highest prices on the European market.
Russia has already received all the preferences as a result of the gas crisis in the countries of the Old World in 2021. Gazprom's record profit and large revenues to the budget from the export duty on gas remained in the past year. During the gas crisis, we were able to quickly complete the construction of Nord Stream 2, but it was no longer possible to launch it. Now our exports to non-CIS countries have decreased by 35.5%. "Gazprom" carries out deliveries, fulfilling contractual obligations mainly under long-term contracts. That is, at prices much lower than on the stock exchange.
Most of the supply of American gas to Europe, on the contrary, goes under spot contracts (at exchange prices, quick purchase-payment for goods and delivery by a certain date), concluded in December and January, when quotes in Europe beat records. In the United States, gas is traditionally cheaper than in Europe, and at that time, even taking into account delivery, it turned out to be more profitable for the countries of the Old World than pipeline gas from Russia or Norway at local exchange prices.
Russia received all the preferences from the gas crisis in Europe back in 2021, now high prices only hinder work
In January 2022, US LNG cost Europe half the price of Russian gas. And as a result of lower gas prices in the Asia-Pacific region (APR), the redirection of supplies to Europe turned out to be in the interests of American exporters, explains Ekaterina Kolbikova, senior consultant at VYGON Consulting.
Traders who now supply American gas to Europe are making super profits for the first time. In January, it was profitable for them not only to supply gas produced in the United States to Europe, but also to transfer volumes from the Middle East and even from Asia, said Aleksey Grivach, deputy head of the National Energy Security Fund. In February, the European premium disappeared, but the significant Asian premium has not yet returned, he elaborates.
If US LNG supplies lead to lower gas prices in Europe, this market will automatically become uninteresting for US exporters. However, it will be easier for the Europeans themselves to buy gas from traditional suppliers. And this, of course, will be unprofitable for American exporters until demand in the Asia-Pacific countries returns to its maximum.
Now panic in Europe is supported by politics - the risks associated with the aggravation of relations between the Russian Federation and the United States because of Ukraine, and the possibility of sanctions against the export of energy resources from our country. It is indicative that all LNG supplies from the US have not been able to seriously reduce stock gas quotes in Europe, and any news about successful negotiations between Russia and the US or European leaders bring down prices by $100-150.
At the same time, the very situation with the shortage of gas in the world and the increase in US exports cause prices to rise in the relatively calm US gas market. In January 2021, spot gas prices in the United States were about $98 per thousand cubic meters, and in January 2022 - $158. And relative to 2020, the average price of 2021 has almost doubled, Grivach clarifies.
In 2022, domestic gas prices in the United States will remain at a high enough level for the country - $145 per thousand cubic meters, including due to a gas shortage in Europe and a correspondingly high load on LNG plants, Kolbikova said.
In her opinion, the US gas shortage does not threaten due to the growth in production. But as Deputy Director General of the National Energy Institute Alexander Frolov noted, the main increase in gas production in the United States is due to the production of shale oil, and it has recently been at the same level. But the increase in gas exports is increasingly beginning to influence the domestic market in the United States - both on prices and on the provision of consumers with the required volumes.
Preliminary statistics confirm what the expert said. In 2021, US gas production increased by only 6 billion cubic meters compared to 2020. Therefore, it is unlikely that the country will be able to greatly increase gas exports in 2022, as it did in 2021 due to new LNG production capacities.
Due to a certain shortage in the global LNG market in 2022, as well as with almost completely depleted European gas storage facilities, LNG imports from the United States will not be able to affect prices in Europe, Kolbikova said.The European gas market is the backyard of the world LNG market, it is dependent on the situation in the Asia-Pacific countries, Frolov notes. The Asian market is physically larger. If prices fall in Asia, then prices in Europe fall, and vice versa. For 11 months of 2021, half of American gas exports came to Asia-Pacific countries, and only a quarter to Europe. The redirection of LNG flows from the US to Europe will lead to an increase in gas prices in the Asia-Pacific region, gas carriers will again go to Asia, and prices in the European market will again begin to break records, the expert explains.
As a result, it turns out that Europe will not be able to do without Russian gas, unless the inhabitants of the countries of the Old World do not want to pay absolutely space money for electricity and heat.
bbabo.Net