“A capacity of 34 tankers is 4 billion cubes, gas deficiency in Europe is 8-9 times more”

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Gazeta.ru, whether we should expect a long-term trend towards a decrease in the cost of natural gas as a result of the LNG tankers turn from Asia to Europe.

American LNG is not an assistant to the EU

According to Aleksey Gromov, the fall in exchange prices is now largely due to positive weather forecasts in European countries. Amid a relatively warm December, the demand of the EU countries for Russian gas also fell.

“Shipping US LNG to European terminals is an important signal for stock speculators. It means that there will be no risks of fuel shortages in the next two to three weeks. In addition, a sharp warming is expected in Europe over the next 10 days. For example, in Brussels and Berlin at the beginning of 2022 it will be up to +10-15C,” Gromov stressed.

According to Gromov, part of the tanker cargo will go to the terminal of the Polish port of Swinoujscie. The only major energy player in the EU, which does not have the ability to directly transfer American fuel, is Germany, but neighboring Belgium should come to the aid of Germany. In this regard, the most difficult situation with the reception of LNG has now developed in Ukraine.

Now the only way for Kiev to receive regasified LNG is a reverse supply system from Poland, Gromov stressed. However, the cost of such transit is tied to the spot price, which negates all the advantages of the route. For this reason, Ukraine will continue to depend on Russian fuel transit supplies.

“Kiev is in a geographical trap. All countries of the Black Sea basin, including Ukraine and Turkey, can be called the main losers in the struggle for American LNG. There is a huge problem in the region of the Bosphorus Strait, the width of which does not allow classic supertankers to enter the local water area. Therefore, Ankara is building LNG terminals exclusively on the Mediterranean coast,” Gromov concluded.

“Long-term contracts of Gazprom at the beginning of 2022 will become unprofitable for Europeans. In existing contracts, there is now a fairly high percentage of price pegging to futures for one to three months in advance. This means that already in January-February 2022, Russian gas will absorb the sharp rise in prices that prevailed on the EU exchanges in October-November 2021,” Gromov stressed.