US liquefied natural gas (LNG) exporters are the only winners in the European gas crisis as they report exporting record volumes to the EU.
For three consecutive months now, US LNG exporters have registered record exports to the EU, at premium prices that continue to grow, Reuters reports.
Natural gas prices in the EU have reached record highs and are continuing to soar just as US LNG exporters wrapped up protracted projects aimed at boosting their export capacities.
According to traders, the largest LNG exporter in the US, Cheniere Energy, is one of the top beneficiaries, having signed new long-term agreements in recent months.
Commodity trading companies such as Gunvor and Trafigura have also profited from the crisis as they diverted gas deliveries from other regions to Europe.
Higher profit on horizon
As one European trader has pointed out, the US and its LNG producers stand to profit from the gas shortage in Europe and “will further profit if Russian volumes are sanctioned.”
Gas prices in Europe started rising in the summer of 2020 and recently spiked after the US announced it was discussing a ban on the import of Russian gas with European countries. If there is agreement and bans are implemented, prices will likely rise steeply again
Natural gas prices in Europe are now so high that traders are paying penalties for non-delivery that run to millions of dollars in order to divert LNG cargoes to European markets where they sell at a premium.
According to sources at one large energy company, the US has diverted tens of LNG shipments from Asian to European destinations in the last three months.
Developing countries that depend on LNG imports cannot compete with the prices being paid in Europe and are being forced to buy gas on the spot market or switch to different fuels like oil or coal.
An industry source noted that the Italian energy company Eni, a long-term supplier to Pakistan, was unable to honour cargo deliveries it was supposed to make there because its supplier, Trafigura, had opted to send three cargoes to Europe instead.
“Trafigura would rather pay the penalty fee, which is around US$ 11-12 million, and sell the gas on spot market at today’s prices”, the source claimed.