OPINION: That well-known adage ‘desperate times call for desperate measures’ holds as true today as ever — not least in the current global gas crunch.
Amid rocketing — albeit fluctuating — liquefied natural gas prices, energy importing northern hemisphere nations are bracing themselves for a tough winter, with European countries already scrambling to find volumes to replace the Russian pipeline gas supplies halted by Moscow.
Against this backdrop, Petronas earlier this month declared force majeure on gas supply to its 9.6 million tonnes per annum MLNG project in Malaysia, potentially leaving Japanese term customers in the lurch and reducing LNG volumes in an already volatile global market.
Whether or not this force majeure was the catalyst, Japan’s Cabinet last Friday approved legislation that would allow state-owned Japan Oil, Gas & Metals National Corporation (Jogmec) to purchase LNG on behalf of utilities if they struggle to do so in the already heated market.
Although European gas prices have softened in recent days as storage facilities reached above 90% full, another global supply disruption looms large with the 22 million tpa nameplate capacity Nigeria LNG on Monday declaring force majeure.
This liquefaction project, which was already producing under capacity because of gas feedstock issues, has been further impacted by widespread flooding that has shut in producing fields.
A simple fact of life is that LNG cargoes will almost always be delivered to the highest bidder, irrespective of who is actually picking up the tab, and not everyone will be able to afford that.
(This is an Upstream opinion article.)