Natural gas shipments, mainly from the US, help Europe reduce energy

Near the entrance to the vast harbor of Rotterdam in the Netherlands is a dedicated port that is offering an alternative to the site of Russian pipeline supply much of Europe’s craving for nature Air.

The facility, known as the Gate Terminal, is an important entry point for liquefied natural gas, an increasingly important fuel for Europe. This week, a huge oil tanker, the GasLog Glasgow, was sitting in a jetty there, waiting for a winter storm to ease so it could unload. Liquefied natural gas from Egypt. Another ship full of gas waits its turn offshore.

“It’s been very busy,” said Stefaan Adriaens, commercial director at the station.

He said a year ago the station was operating at about 5% capacity. Recently, “we’re running at 100 percent usage.”

In recent months, natural gas prices have skyrocketed in Europe, followed by a parade of liquefied natural gas tanker to ports like Rotterdam. The very high prices reflect tight Russian gas supplies to Europe, the low amount of fuel in the continent’s storage tanks and geopolitical worries over Ukraine, where the United States and its major currencies are concerned. believe that Russia may be preparing for an invasion.

Ships can carry huge amounts because when cooled to minus 260 degrees F, natural gas reduces to a liquid taking up only one percent of its volume as a gas. Liquefied natural gas, known as LNG, is loaded on board and transported to any location that has facilities to receive the cooled fuel and warm it back up to a gaseous state.

According to industry estimates, a large oil tanker, the length of three football fields, can transmit powerful energy – enough to light up 70,000 homes for a year, according to industry estimates.

Although GasLog Glasgow’s cargo comes from Egypt, a medium but growing gas power, most of the liquid gas flowing to Europe these days is from the United States.

The long-awaited energy battle between Russia, the dominant gas exporter to Europe for decades, and the United States, which has been boosting the ability to export gas to customers for years, is finally here. takes place. Leveraging the abundant gas resources from shale drilling, over the past six years, the United States has grown from virtually nothing to become one of the world’s largest exporters of liquefied natural gas, along with Qatar. and Australia.

“A lot of US exporters have ramped up their supply to Europe in the last month or so,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies, a Washington think tank.

While expanding rapidly, exporters with goods from the United States are also more likely than others to send their ships to where they get the highest rates. As a result, so far this winter, suppliers of liquefied natural gas from along the Gulf of Mexico and elsewhere have saved Europe from a situation that would have been catastrophic even without it. disagreement with Russia over Ukraine.

The The Biden administration is also leaning about their suppliers and customers to help Europe go far.

Unusually large shipments of liquefied natural gas and even outstrips gas imports from Russia in recent weeks. Gergely Molnar, an analyst at the International Energy Agency, said the increase highlights “the fuel’s contribution to gas supply security” during a webinar hosted by the Program. Clingendael International Energy held in the Netherlands.

Shipments to Europe in the fourth quarter of 2021 were up more than 40% from a year earlier and more than double the rate in January 2021, according to the International Energy Agency, according to the International Energy Agency. economic.

Niels Fenzl, Vice President of Transport and Terminals for Uniper Global Commodities, which imports gas through Gate Terminals, said that typically at this time of year, tankers are transporting gas. Liquefied natural combustion to Asia. “The market has changed, with volume pouring into continental Europe,” he added.

Because of these shipments, and because the winter has been so mild so far, the executives of Uniper, a large energy company based in Düsseldorf, Germany, say they feel more comfortable having enough gas. burned to survive the cold months, when consumption is highest. .

However, they concede that a complete cut off of Russian gas for more than a few days – which most energy analysts consider unlikely – would be a severe test.

“We’re not saying the lights will go out or people will get cold, but it’s going to be an uncomfortable situation,” said Gregor Pett, Uniper’s executive vice president of market analysis. “Even if you squeeze out the last bit of capacity from the current terminals, it will be very cramped,” he added.

While shipments of liquid gas are certainly a boon for homes, factories and power supply facilities in Europe, there are limitations.

Europe is paying a heavy price for this gas. About 100 US and Qatari tankers are expected to arrive in Europe last month, at a cost of $8.5 billion, said Henning Gloystein, director of Eurasia Group, a political risk firm.

These shipments have helped cool prices down to less than half of their December highs, but Dutch gas futures TTF exchange are still selling for about $25/million heat units. UK, about 5 times the price in the US.

Shipments may also be close to their upper limit. Many European receiving terminals are at or near their capacity. Mr. Adriaens said that a port like Gate can only handle about 11 ships per month.

Weather permitting, an oil tanker could unload during the day, but the facilities for storing, refueling and feeding the gas grid are the bottleneck.

Until recently, there was little reason to pour money into larger establishments. Liquefied natural gas is something of a cult in Europe, with goods mainly going to Asian countries like Japan, Korea, and China.

Several countries in Europe import large amounts of LNG, among them the UK and Italy, which have three terminals, including one in Panigaglia near Genoa. Germany, Europe’s largest gas consumer, lacks a dedicated terminal but receives gas through the Gate or other nearby stations.

Unlike container ships, which face huge redundancies at some ports, gas carriers often move in and out of berths on schedule, especially because otherwise, industry insiders say. There may be a loss of valuable goods.

“If you have time to wait, a little bit of cargo is shipped every day,” said Paul Wogan, chief executive officer of GasLog, a major operator of LNG vessels. “You really want to go straight to the port,” he added.

Analysts also say the global liquefied natural gas industry is producing close to its limit. There are already many facilities to send gas to Europe as Asia is experiencing a warm winter, but that situation may not last.

“If goods go to Europe, that means they go out of other markets,” Mr. Cahill said. Natural gas shipments, mainly from the US, help Europe reduce energy

Fry Electronics Team

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