LNG

European and Asian liquefied natural gas cargo pricesincreased for a fourth straight week with the Northern Hemisphere winter gas season ending on a high storage note and as some European Union nations even built their storage this week as demand was mixed in the north and the south.

Shell Chief Executive Ben van Beurden said there was no swift solution to Europe’s current energy crisis and the region would face significant challenges in meeting demand for several winters to come.

“I do not think this crisis is going to be limited to just one winter,” Ben van Beurden said at the Offshore Northern Seas (ONS) Foundation 2022 conference in Stavanger, Norway.

“It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing, and through a very quick build out of alternative gas imports or hopefully alternative energy sources,” said the Shell CEO.

His comments come after European natural gas and power futures contracts soared again to record highs and LNG cargoes are now priced at more than $300 million each.

Prices have surged since Russia’s invasion of Ukraine in February 2022, though they were already moving higher amid fears of gas shortages after the European Union’s halting of the start-up of the Gazprom-led Nord Stream II gas pipeline from Russia about four months before the Ukraine events.

About-turn

Analysts said that Van Beurden’s statement was a timely intervention though he has been among the majority group of energy CEOs, bankers and political leaders who have jumped on the net-zero bandwagon without making sure or emphasizing that sufficient oil and gas would have to be available in the years ahead before an energy transition is completed.

Even though the EU aims to reduce gas imports from Russia by two-thirds within a year and be virtually independent in five years, the 27-nation bloc is still reliant on Russian supplies in the near term.

“If there was no Russian gas supply at all life would be very hard,” stated Van Beurden whose company was shut Russian operations, including pulling out of the Sakhalin II LNG export plant in the Russian Far East.

Van Beurden said people should be mindful and responsible when it comes to the energy crisis and to understand that to believe that it could easily be solved was a “fantasy”.

The Shell CEO told the Norwegian conference that energy rationing may be needed for a number of years, underlining the scale of the challenge facing global economies.

Musk warning

Another speaker at the Norwegian conference was Elon Musk, the billionaire head of Tesla, the US multinational automotive and clean energy company headquartered in Austin, Texas.

Musk said “civilisation will crumble” without oil and gas as he warned the switch to green energy could take several decades.

He stated that the world needed to continue extracting oil and gas while it builds out renewable energy.

Musk declared that the current global energy crisis and the transition to sustainable energy was “one of the biggest challenges the world has ever faced”.

“Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble. One of the biggest challenges the world has ever faced is the transition to sustainable energy and to a sustainable economy. That will take some decades to complete,” he explained.

Most of Gazprom’s European Union pipeline natural gas customers are set to open new bank accounts with Gazprombank to meet Russian demands for the payment of volumes to be made in Russian roubles.

Russian Foreign Minister Sergey Lavrov said that he explained to his German counterpart Annalena Baerbock that demands on Russian troop operations on the country’s own territory were unacceptable while Baerbock warned Moscow against weaponizing energy, including the Nord Stream II natural gas pipeline.

A Dutch parliamentary committee has been told that natural gas storage levels in the Netherlands were well short of capacity and the situation is a matter of concern, though not considered a crisis.

French energy major Total reported overall liquefied natural gas sales in 2020 of 38.3 million tonnes, an increase of 12 percent over the previous year, boosted by projects such as the US Cameron LNG export plant in Louisiana and revealed plans to change its name to Total Energies.

US LNG exports plunged to their lowest weekly level since December 2016 as only four cargoes departed from the five main US export plant compared with seven shipments a week ago as current US and global natural gas and LNG values blunted the sector’s recovery.

May 19 (LNGJ) - The UK benchmark natural gas price has dropped to its lowest level of the year to be at the equivalent of $1.40 per million British thermal units, around the same mark as US Marcellus shale gas. The Continental European benchmark, the Dutch Title Transfer Facility price, was also falling and was last at the equivalent of $1.55 per MMBtu.

   UK natural gas supply flows on May 19 amounted to 184.65 million cubic metres and current demand was 187.57 mcm, according to National Grid data. Supply flows at gas grid connections near the UK’s LNG terminals at Milford Haven in Wales and the Isle of Grain, southeast of London, were at 49.95 mcm for South Hook LNG and Dragon LNG and 3.00 mcm for the Grain LNG terminal.