EUROPE GAS-European gas prices soar as Iran had conflict halts Qatar LNG output
The benchmark Dutch and British wholesale gas prices rose by nearly?50% after Qatar Energy, a major LNG exporter, announced that it had stopped production because of attacks in the Middle East.
Qatar is soon to become the second largest LNG exporter in the world after the United States. It plays a significant role in balancing the demand for LNG on both the Asian and European market.
Trade sources report that most tanker owners and oil majors, as well as trading houses, have stopped shipping crude oil, fuel, and liquefied gas (LNG) through the Strait of Hormuz after Tehran warned against ships moving along the waterway.
Europe has increased its LNG imports in the last few years as it attempts to phase out Russian Gas following Russia's invasion.
Around 20% of world LNG transits the Strait?of Hormuz, and a suspension or complete closure would increase competition globally for other sources?of gas. This could drive up prices internationally.
Massimo Di Odoardo is vice president of gas and LNG research for Wood Mackenzie. He said that disruptions to LNG flows could reignite the competition between Asia, Europe and North America over available cargoes. The Dutch front-month at the TTF Hub, seen as a reference price for Europe was up 14.56 euro at 46.52 Euros per Megawatt Hour (MWh), which is around $15.92/mmBtu by 1255 GMT.
QatarEnergy's production stoppage led to a further increase in prices, which were already 25% higher.
The benchmark Asian LNG price jumped 39% Monday morning, with the S&P Global Energy Japan Korea Marker (JKM), which is widely used as a benchmark for Asian LNG, being $15.068 per mmBtu.
Warren Patterson, head commodities strategy at ING said: "If LNG/gas market start pricing in an extended period loss to Qatari LNG supplies, TTF could spike up to 80-100 euros/MWh (28-35 mmBtu)". ICE data shows that the British April contract?was down 40.83 pennies at 119.40 penny per therm.
Gas Infrastructure Europe's latest data shows that Europe also relies on LNG imports to fill its gas storage sites, which were?depleted during the winter months and are now?around 30% filled. The benchmark carbon contract in Europe was down by 1.10 euros at 69.17 euro per metric ton. (Reporting by Susanna Twidale, with additional reporting from Nora Buli in Oslo and editing by Nina Chestney.)
(source: Reuters)
