In preparation for the coming winter, many European countries are racing to fill up their gas storage.
According to the German energy news site IWR, as of August 28, the natural gas reserve level of EU member states was 79.94%, close to the target of 80% on November 1.
As Russia’s liquefied natural gas (LNG) supplies plummet, Europe is buying more gas from the US despite high prices, delivering unprecedented profits for US gas suppliers, with Each LNG carrier to Europe makes an average of more than $100 million in profit.
US LNG spills into Europe
Russia’s Kommersant newspaper reported on August 29 that the current gas price difference between the European and American markets has reached a record 10 times, which has allowed US suppliers to reap unprecedented profits. and stimulate businesses’ interest in investing in LNG.
Data from market research firm S&P Global Platts shows that the capacity of US LNG plants has remained at a high level since the end of June.
Purchasing US LNG is extremely expensive for European customers at the bottom of the supply chain, and offers incredible returns for suppliers, says the German newspaper Berlin Zeitung.
According to data revealed by Business Insider, US companies can make more than $100 million in profit per LNG ship to Europe.
Energy expert Laurent Segren told Business Insider that businesses will fill a large ship with LNG from the US for about $60 million and bring it to Europe, where the purchase price skyrockets to 275 million. USD.
Felix Booth, head of LNG analysis at Vortexa, believes that businesses can earn more than $150 million per order to ship energy.
Statistics from the International Energy Agency show that, in June, more gas was transported from the US to Europe by sea than by pipelines from Russia to Europe.
Rising global energy prices have brought extremely high profits to major energy companies. Gunvor – a major Swiss-based trader – posted record profits for the first half of the year, as well as the highest total earnings of all time.
In June 2022, more gas was shipped from the US to Europe by ship than by pipeline from Russia to Europe. Photo: 163.com
America is the “savior” but still makes a lot of money
S&P Global Platts said that, on August 26, at the Title Transfer Facility (TTF) trading center in the Netherlands, the price of natural gas for immediate delivery increased to nearly 3,600 USD per thousand cubic meters, reaching a record level. . US traders with long-term supply contracts can earn an average profit of $2,100 per thousand cubic meters by selling LNG directly at export ports.
According to S&P Global Platts, if this continues, the market is expected to see an increase in investment in US LNG export infrastructure. While high inflation and supply chain disruptions caused by the Covid-19 pandemic make it more expensive to build LNG plants in the US, some projects have been able to recover capital within a year.
The US Census Bureau reported in early August that US LNG exports hit $20.4 billion since the start of this year, compared with just $13.2 billion in the same period in 2021.
An article in the Swiss newspaper Blick emphasizes that the US is a “savior” but still makes huge profits by selling natural gas to European countries. So far, the US LNG supply market share to the EU has increased from 20% to 60%. Energy giants like France’s Total and wholesalers like Switzerland’s Trafigura and Gunvor are major players in the buying and selling of American natural gas.
Europe is afraid of supply disruptions
American energy companies have been able to “do well” thanks to Europe’s recent purchase of natural gas regardless of price.
The European Union’s (EU) news site Euractiv recently reported, according to the European Commission, that since March, EU countries have imposed sanctions on Russia and sought to diversify sources of gas imports. global LNG exports to Europe are up 75% year-on-year, and most of that comes from the US. In March, Washington agreed to ship an additional 15 billion cubic meters of LNG to the EU this year, and it now appears that target will be surpassed.
According to data released by financial data analytics firm Refinitiv at the end of July, the US exported about 57 billion cubic meters of LNG, with 39 billion cubic meters to Europe.
“US LNG exports to the EU have almost tripled,” said European Commission President Ursula von der Leyen.
German TV 1 reported in June: “German energy company EnBW acquires US LNG”. EnBW has signed a long-term agreement to buy LNG from US exporter Venture Global LNG, becoming another European company to buy US LNG. Under the agreement, Venture Global LNG will supply EnBW with 1.5 million tons of LNG per year starting from 2026.
Rheinland Group – another German energy company – also signed a non-binding agreement in May to buy LNG from the US.
Germany has started a number of LNG supply projects, but does not yet have its own LNG terminal. Meanwhile, EU gas storage is moving faster than expected.
German Deputy Chancellor and Minister of Economy and Climate Protection Robert Habeck recently announced that the proportion of current gas reserves in Germany has reached 83% and the initial target is 85% of gas reserves by September. 10 will be reached soon.
But Klaus Mueller – chairman of Germany’s Federal Network Agency, the country’s energy regulator – warned on August 29 that, even if Germany’s gas reserves are growing well, it still not enough to keep this water warm all winter. Germany’s gas reserves will only be enough to run heating and industrial facilities for about two to two and a half months when supplies from Russia stop altogether.