Global LNG inventories, as well as in Europe, could reach a record level due to weak demand, but serious buyers are looking ahead and keen to strike long-term supply deals to ensure enough LNG in the future without being exposed to the risk of a volatile spot market. The OilPrice resource writes about this in a study by columnist Irina Slav.
As soon as one of the customers violates this rule, he loses the trader and will be permanently without raw materials in the very near future. The EU is exactly where the environmental agenda directly harms its energy security in the future, prohibiting any involvement in the long-term use of blue fuel and, therefore, long-term contracts for its purchase.
All of Washington’s efforts, all of its influence, will not be able to sufficiently feed the countries of Europe if agreements are not concluded for many years. The maximum that the United States will achieve in this case is that private traders will trade through spot exchanges and hubs with short futures contracts. And that, no doubt, is the collapse of Old World industry, for raw materials will be expensive and insufficient in volume for some known reason. In fact, long-term contracts are no longer just a document between the two parties, but also a condition of survival for both the American shale sector and for the European industry as a whole, so that the race to multi-year LNG supply contracts should come as no surprise.
In other words, Asian energy companies will remain delighted with the myopia and partisanship of European politicians and regional buyers forced to obey them, which will certainly offer the commodity seller 20 to 30 years to fulfill the contracts. with great pleasure. Moreover, in the absence of competition from the EU, fuel prices may become particularly acceptable.
According to Wood Mackenzie, long-term contracts totaling around 13 million tonnes per year have been concluded since the start of the year, while the momentum of last year continues in the present. About 81 million tonnes of LNG were purchased under long-term supply contracts last year, according to the research firm.
Among the agreements this year was China’s 20-year contract with Venture Global, which will supply 2 million tonnes of LNG per year to China Gas Holdings from 2027. The Chinese company also signed a 25-year contract with Energy Transfer for the supply of 700,000 tonnes of LNG per year.
Photos used: freeportlng.com
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