{"id":1659092,"date":"2022-09-26T20:51:28","date_gmt":"2022-09-27T00:51:28","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1659092"},"modified":"2022-09-26T20:52:04","modified_gmt":"2022-09-27T00:52:04","slug":"gas-crisis-lands-lng-cargo-market-in-hands-of-energy-giants","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/gas-crisis-lands-lng-cargo-market-in-hands-of-energy-giants\/","title":{"rendered":"Gas crisis lands LNG cargo market in hands of energy giants"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fgas-crisis-lands-lng-cargo-market-in-hands-of-energy-giants%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1659092&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Marwa Rashad and Chen Aizhu<\/p>\n<p>LONDON\/SINGAPORE (Reuters) \u2013     Rocketing LNG cargo prices have squeezed out dozens of smaller traders, concentrating the business in the hands of a handful of international energy majors and top global trading houses.<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\">\n<\/div>\n<p>This grip is not expected to ease until 2026 when more liquefied natural gas (LNG) starts to materialise and lower prices, adding to supply worries for poorer states reliant on it to generate power and driving up costs for big Asia economies.<\/p>\n<p>The global LNG market has more than doubled in size since 2011, ushering in dozens of new entrants and the expansion of smaller players in Asia. In recent years, smaller traders accounted for 20% of LNG imports in China alone.<\/p>\n<p>But a spike in spot LNG cargo prices to $175-$200 million, from around $15-$20 million two years ago, has had a seismic impact on physical trading activity for many smaller players.<\/p>\n<p>The capital needed to trade the market soared after benchmark LNG prices rose from record lows below $2 per million British thermal units (mmBtu) in 2020 to highs of $57 in August.<\/p>\n<p>In July, Japan\u2019s Nippon Steel Corp, the world\u2019s second-largest steelmaker, purchased an LNG shipment at $41\/mmBtu. LNG spot prices price stood at $40.50\/mmBtu then. <\/p>\n<p>Prices have recently eased, hitting $38\/mmBtu on Monday, but analysts say they remain at levels that can be linked with an ongoing energy crisis. <\/p>\n<p>GRAPHIC \u2013 Northeast Asia LNG spot prices-Anual Comparison<\/p>\n<p>https:\/\/graphics.reuters.com\/UKRAINE-CRISIS\/LNG-TRADE\/akpezdglxvr\/Northeast%20Asia%20LNG%20spot%20prices-Anual%20Comparison.jpg<\/p>\n<p>\u201cThe biggest challenge facing every market participant right now is credit,\u201d said Ben Sutton, CEO of Six One Commodities, a U.S.-based LNG merchant that had to scale down operations after prices soared in the third quarter of 2021.<\/p>\n<p>Short term market volatility has heightened risk for traders, with geopolitics rather than fundamentals driving price moves.<\/p>\n<p>\u201cThe ballooning of LNG cargo values, along with the spike in volatility, has \u2026 put quite a strain on those players operating with smaller balance sheets,\u201d said Tamir Druz, managing director of Capra Energy, an LNG consultancy.<\/p>\n<p>In Asia, a trading executive told Reuters some smaller players had left offices \u201cdormant\u201d in Singapore\u2019s trading hub, while second-tier Chinese traders and\u00a0some Korean firms scaled down activity due as finance became harder to secure.<\/p>\n<p>\u201cLNG has gone back to be the commodity of the rich,\u201d Pablo Galante Escobar, Global Head of LNG at energy trader Vitol, told this month\u2019s international Gastech conference in Milan.<\/p>\n<p>\u2018HIGHER AND LONGER\u2019<\/p>\n<p>Conditions are now heavily skewed in favour of players with large, diversified portfolios and strong balance sheets like oil majors Shell, BP and TotalEnergies along with major trading houses including Vitol, Trafigura, Gunvor, and Glencore. \u00a0<\/p>\n<p>BP, Shell, Trafigura and Glencore declined to comment. TotalEnergies, Vitol, and Gunvor did not immediately respond to Reuters request for comment.<\/p>\n<p>Shell and TotalEnergies are estimated to have a combined portfolio of 110 million tonnes of today\u2019s 400 million tonnes (MT) LNG market, global head of business intelligence at energy and shipping consultancy Poten &#038; Partners Jason Feer said.<\/p>\n<p>Both have built portfolios, with Shell buying BG and TotalEnergies taking on Engie\u2019s LNG arm. Both are also partners in Qatar\u2019s North Field, one of the biggest LNG projects.<\/p>\n<p>Adding in Qatar Energy\u2019s portfolio of 70 million tonnes and BP\u2019s, which is estimated at around 30 million, means that four players account for more than half of the market.<\/p>\n<p>While rising interest rates are adding to trading costs, these have not yet troubled big players, for whom increased price pressure represents a sweet spot, industry sources said.<\/p>\n<p>Shell and TotalEnergies have reported record-breaking profit, while Vitol\u2019s record first half 2022 profit exceeded its results for the whole of 2021.<\/p>\n<p>Guy Broggi, an independent LNG consultant said Shell and TotalEnergies were major winners as partners and offtakers at Egyptian plants at Damietta and Idku, along with BP and Italy\u2019s ENI, selling LNG far above the government\u2019s target price of $5\/mmbtu. <\/p>\n<p>As buyers of U.S. LNG via long term contracts, Shell and TotalEnergies also made massive gains from reselling low priced U.S. cargoes to higher priced European markets, he said.    <\/p>\n<p>\u201cWe are entering unchartered territory as far as LNG markets are concerned and the aftermath of the current crisis with Russia is hard to fathom- not only for LNG. One sure thing is prices are here to stay higher and longer,\u201d Broggi said.<\/p>\n<p>\u2018DIFFICULT TO COMPETE\u2019<\/p>\n<p>High LNG cargo prices are also widening energy poverty globally as some cargoes, initially destined for poorer nations, end up being diverted to European buyers.<\/p>\n<p>U.S. LNG shipments shift toward Europe: <\/p>\n<p>\u00a0\u00a0\u00a0\u00a0\u201cPakistan and Bangladesh emerge as big losers as both had procurement strategies with high percentage of spot purchase and were left to face power crisis this year,\u201d said Felix Booth, head of LNG at data analytics firm Vortexa.<\/p>\n<p>\u00a0\u00a0\u00a0 In July, Pakistan LNG Limited (PLL) received no bids in a tender to import 10 cargoes of LNG.<\/p>\n<p>Indian oil ministry showed India paid 20% more on an annual basis for its July LNG imports, valued at $1.2 billion, while monthly import volumes slid further due to high spot prices.<\/p>\n<p>\u201cUntil we build more infrastructure and put more vessels in the water \u2026 it is going to be difficult to compete with the well established markets,\u201d Charlie Riedl, executive director for trade group the Center for Liquefied Natural Gas (CLNG), said. <\/p>\n<p>Slow project development and a possible return of China from of COVID-related curbs will keep prices elevated, Feer at Poten &#038; Partners said.<\/p>\n<p>\u201cIt could get worse if China comes back into the market in a big way. China has been out of the market this year because of lower demand due to its lockdowns and slower economic growth. That has allowed volume to flow to Europe,\u201d Feer added.    <\/p>\n<p> (Reporting by Aizhu Chen in Singapore and Marwa Rashad in London; Additional reporting by Julia Payne in London; Editing by Veronica Brown and Alexander Smith)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/gas-crisis-lands-lng\/attachment\/file-photo-an-lng-tanker-is-tugged-towards-a-thermal\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/09\/tagreuters.com2022binary_LYNXMPEI8Q001-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI8Q001-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Marwa Rashad and Chen Aizhu LONDON\/SINGAPORE (Reuters) \u2013 Rocketing LNG cargo prices have squeezed out dozens of smaller traders, concentrating the business in the hands of a handful of<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1659092","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1659092","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1659092"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1659092\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1659092"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1659092"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1659092"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}