The Netherlands’ gas transmission system operator Gasunie has advised the Dutch government to keep Groningen, the EU’s largest gas field, open at minimal production levels until further notice instead of closing it down in October as currently planned. This is to help mitigate security of supply risks as the country’s additional LNG import capacities have not yet replaced all the lost Russian pipeline supplies.
With the looming physical tightness of ULSD in Europe, refiners in the wider area are already starting to look at some creative refining to try and capitalize on the attractive economics. The upcoming length in off-spec diesel might just offer some respite to Europe after it goes through the process of phasing out imports from Russia, once the embargo kicks in.
Food inflation has taken hold across the world. In places like America and Europe, food prices were up by more than 10% y/y in December. Nonetheless, the situation seems to be improving. Wheat prices have eased considerably off the highs seen in the initial months following Russia's invasion. Food inflation in m/m terms is already showing signs of a slowdown. The grain deal, which came into effect last August, is clearly having an impact. Ukraine managed to ship 4.75 Mt in total seaborne wheat tonnage through the final five months of the year.
The UK’s North Sea Transition Authority (NSTA) closed its latest round of exploration licenses for offshore gas blocks, among which four priority areas with known reserves could start producing in 18 months. This could limit the UK’s reliance on LNG.
Nigeria LNG continues to operate its 22.2 mtpa plant on Bonny Island at a reduced rate as a force majeure declared in October on upstream supplies remains in place.
The share of global LNG in the European Union’s gas import mix rose to unprecedented levels in 2022 as the bloc increasingly relies on LNG to replace most of the lost Russian pipeline supplies.
EU LNG imports reached monthly and annual all-time highs in December and 2022 as the bloc increasingly relies on LNG to replace most of the lost Russian pipeline supplies.
Europe remains highly dependent on Russian clean product exports, particularly gasoil/diesel. As we head towards the embargo, it was expected that reliance had fallen, not risen. The ban will, however, bring about a change in global trade patterns for both middle and light distillates.
As Urals flows to Europe are drying up, being partly replaced by a ramp-up and re-routing of Johan Sverdrup deliveries, Russian crude supply should decline from December onwards. Moreover, a short-term supply disruption was resolved, after a dispute between the Turkish government and a club of WoS maritime insurers caused a backlog of 15-30 vessels in the Turkish straits.