New LNG Projects in US, Europe to Be Supported by Russian Gas Fears -- Market Insight
March 01 2022 - 8:12AM
Dow Jones News
Commentary by Adam Clark
Russia's invasion of Ukraine is prompting a spike in natural gas
prices which should boost U.S. production of liquefied natural gas
but could also revive European plans for LNG terminals. While
Russian exports of gas --which normally account for 30% of European
demand-- haven't yet been blocked, the possibility of disruption
caused by conflict or financial sanctions are exacerbating the
energy crisis in Europe. Dutch TTF gas prices, the European
benchmark, are around 100 euros a megawatt hour, up from EUR16/mwh
a year ago.
U.S. gas producers such as Cheniere Energy and Range Resources
are likely to be short-term beneficiaries as Europe imports gas
from alternative sources. Both stocks are up more than 25% in 2022
to date. While currently U.S. LNG exports are running at almost
full capacity, analysts at consultancy Wood Mackenzie note European
buyers are now likely to be more willing to sign long-term
contracts which will support new U.S. production facilities.
Over the longer term, European companies will have a stronger
incentive to build LNG import terminals, as they scrap deals with
Russia such as Shell's exit from joint ventures with Gazprom,
including its stake in the Sakhalin 2 LNG project. S&P Global
Platts reported Monday that Germany's Uniper is considering
restarting work on a floating LNG import terminal at Wilhelmshaven
in northern Germany, having previously shelved the plan due to a
lack of long-term booking interest.
Market Insights are commentary that is independent of the news
coverage by reporters at The Wall Street Journal.
Write to Adam Clark at adam.clark@dowjones.com
(END) Dow Jones Newswires
March 01, 2022 07:57 ET (12:57 GMT)
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