Floating storage regasification units are increasingly likely to be the go-to choice for new LNG import projects, given their lower cost, quicker time to come online and flexibility instead of their costlier onshore alternatives as countries pursue their decarbonization goals, according to Yoshikazu Kondo, General Manager of Mitsui OSK Lines’ offshore technical division.
EU member states agreed to continue cutting their gas demand by 15% compared to the five-year average until Mar. 31, 2024. The emergency legislation started applying in August 2022 to help the bloc refill its gas stocks and mitigate its unprecedented gas shortage following the Russian pipeline supply cuts.
OPEC+ members remain committed to keeping output quotas unchanged until the end of this year, with the group expected to gradually take back market share over time as non-OPEC sources of supply run out of steam.
The European Union is on track to jointly buy around 10 bn m3 of gas this year, or roughly three-quarters of its mandatory target. The bloc agreed to start joint gas and LNG purchases in April to help ensure stocks are refilled ahead of next winter when supply is expected to remain tight. The EU is also contemplating expanding its voluntary 15% cut in demand until next year as another measure to tackle the current energy crisis.
Through the 2H February, spot corn and wheat prices underwent the largest selloff since early December on an optimistic 2023/2024 production outlook and concerns surrounding the macroeconomy. This is certainly a positive development for those hoping food inflation, which remains at sky high levels, could show signs of easing. Nonetheless, prices have attempted a small rally through early-March, a reflection the market could be oversold. Seaborne trade flows, especially for corn, struggled mightily in February, pacing well under year earlier levels. This update dives into the specifics.
Germany’s third LNG import terminal completed its first commercial delivery on Feb. 16. The country is fast-tracking the launch of several floating terminals between this winter and the next to help replace the lost Russian pipeline supplies as fast as possible but these new capacities alone will not be enough.
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.
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.