US exports to rescue Europe from its dire LNG situation
- 31-Mar-2022 4:29 PM
- Journalist: Robert Hume
LNG prices in Europe reached record-high numbers in early March of 2022 due to the continent's dependency on LNG for energy requirements. The ban on Russian gas imports created a massive price hike in natural gases due to Europe's limited availability. LNG price hike in Europe was so severe that they had to temporarily suspend a few petrochemical refineries from coping with the limited supply of LNG.
The rising price trend of LNG in Europe is now likely to decrease due to various factors coming into play in the European LNG market. The rising number of covid cases in Europe is almost six times higher than that of the number of cases in the United States. This new covid surge in Europe may bring the demand for LNG down and cool the price hike a bit. But the main hope of the European Union (EU) to meet its LNG need is through the deal with the Biden administration to supply natural gas to Europe throughout 2022 and beyond. The US is likely to increase its production since the demand from Asia and Europe remains strong. At present, they have been effectively reached their maximum exporting capacity.
This alliance between the United States and European Commission (EC) is a response to the Russian invasion of Ukraine. This initiative focuses on two core issues: "Reducing Europe's dependency on Russia gas as quickly as possible" and "Reducing overall demand for gas in Europe." The vital step to resolve these issues is to construct LNG storage facilities across Europe and fill 90% of the existing storage facility by November 1 of every year. Even Mexico's exporters have risen their production, but the Asian countries affected by the Russia-Ukraine conflict are their primary target.
As per ChemAnalyst, the LNG prices in Europe will continue to soar due to the strong demand and limited supply. With the import supply from the United States and their plans of improving LNG infrastructure across Europe, the prices may eventually drop once the initiative between the US and EU meets its targets.