European utilities may struggle to secure sufficient supplies to feed their new raft of terminals using floating storage and regasification units according to broker and consultant Poten & Partners
Speaking on a webinar on Wednesday, Poten senior LNG analyst for Europe Piers de Wilde said over the next few months Germany has three of the FSRU-based facilities coming online.
But De Wilde said Poten sees “some constraint” for the utilities like Uniper and RWE who are behind them in being able to secure volumes for these terminals.
He highlighted that there is “some nervousness” about selling into European hubs because of the gas price volatility seen in the region.
The analyst, who said there is currently “much to focus on in Europe”, said there are also questions over the send-out capacities of the incoming FSRUs.
He also pointed to TotalEnergies and Deutsche ReGas’ planned FSRU facility for Lubmin in northeast Germany.
De Wilde said the area is very prone to fog and questioned how much time the five-vessel operation, involving the regasification unit and three small-scale LNG carriers shuttling in cargoes from a floating storage unit, would add to the cargo delivery operation.
He said Europe is still seeing some pipeline gas flows from Russia, which this year have helped bolster the region’s storage levels.
Russian LNG imports to Europe are also up around 42%, with 10 cargoes less going east from Yamal LNG through the Northern Sea Route and heading west instead.
But the recent cold snap is now having an impact on gas withdrawals pushing inventories down below 90%.
Poten global head of business intelligence Jason Feer said Poten is not expecting much Russian pipeline gas to flow to Europe in 2023.
He said in 2022 the region has secured most of the global supplies of flexible LNG and will try to do this again next year.
In the clearly pre-recorded webinar — in which Feer backed Croatia to win the World Cup before a loss sent it packing, while his three colleagues tipped France to win — the business intelligence chief said only around 10m to 15m tonnes of new LNG is due to come into the market in 2023.
He said Europe is still wrestling with the long term aspects of securing supplies and will be tight on gas for next few years.
Poten senior LNG analyst for Asia Pacific Irwin Yip said Asian customers have been pushed out of the market by high prices in Europe in 2022 with LNG imports to China expected to be down by 15m to 17m tonnes this year.
Yip said the weather, supply disruptions and the easing of Covid-19 restrictions could raise LNG demand but many uncertainties remain on these factors.
Senior LNG analyst for the Americas Sergio Chapa, a new Poten team member, spoke about the expected inflow of new US liquefaction projects.
He said banks have been asking “uncomfy questions” to project developers about the apparently low prices they have contracted their LNG at in the flurry of deals seen in the wake of Russia’s invasion of Ukraine.
Chapa said there are currently three new US liquefaction projects which are close to being fully contracted on their sales. But he said the anticipated final investment decisions on these will now likely be pushed into the first quarter of 2023.
