(Bloomberg) – This year was a ride for a natural gas roller-coaster, usually climbing to new heights.
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Spot contracts in Asia and Europe have risen to record, with factory closures and energy retailers from Singapore to the UK depreciating as usual and storage facilities not filling up as usual and now running out rapidly.
For many parts of the world, the worst of winter is not far off, but there are fears that the market may not be balanced until next year.
Here are some questions for traders about 2022:
What about Nord Stream 2?
Europe’s sky-high prices should fall as the Nord Stream 2 pipeline from Russia launches, as the lack of new flows eases concerns. The problem is that no one is sure when it will happen.
The 1,230-kilometer (764-mile) project is under bureaucracy and is awaiting approval from German regulators and EU officials. This means that billions of cubic meters of the continent could spend more winter than Russia could.
Approval process may be delayed until 2022 spring or summer. “No pipeline” situation could push storage to a lower level by the end of winter, Bloomberg NF reported. That could put pressure on governments to approve the pipeline in some way before it can keep families warm and reducing bills.
Will China starve?
China’s seemingly insatiable appetite for natural gas surprises the market.
The ongoing energy crisis is partly due to China’s need to move away from fossil fuels, especially coal, to boost its economy to achieve larger climate goals. Economic growth in 2021 will be higher than planned, and the government says it is fully confident next year – which could leave Asia with little gas, European and South American rivals.
“China is clearly increasing gas demand,” said Steve Hill, chief executive of Shell Energy. “China must play a big role in finding solutions to reduce emissions because eventually some coal will have to be displaced.”
Who is building what?
From the United States to Mozambique, there are overcrowded LNG export projects vying for final investment decisions. Following the delay in approval due to the CVD-19 epidemic, new projects are being cleaned up.
American Developers – Cheniere Energy Inc., Venture Global LNG Inc. And Tellurian Inc. – engaged in signing supply agreements for their proposed export projects. The companies said they would secure funding next year.
The governments of Australia and Japan say the world needs more investment in mass natural gas supply to address another shortage. Whether or not it will be implemented by 2022 will determine whether there will be enough gas by the end of the decade.
Could US be number 1?
Two new LNG export facilities in Louisiana could transform the US into the world’s largest exporter. The commissioning process for Train 6 started at Sabine Pass and Calcasieu Pass LNG, and now the only question is when to ship their first shipment.
Sabin Pass has already produced the first drops of LNG, and by the end of the first quarter, the train is expected to be commercially available about a year before the completion date. Calculus Pass is receiving a small amount of natural gas for the first trains using the construction module method.
In terms of LNG production capacity, the United States lags behind Qatar and Australia 3, and U.S. production could reach higher levels if overseas rivals struggle with results or maintenance.
What is TTF?
The Dutch gas trade is not limited to the Dutch. According to Gordon Bennett, Consumer Marketing Manager at ICE Futures Europe, Benchmark, a remittance facility, has become the most widely used gas market outside Europe.
In Japan, the Japanese-Korean marker has jumped in recent years, but still tracks what it sells as a TTF, making the European index a more reliable choice for traders. Several overseas LNG supply agreements have been signed with TTF this year, including acquisitions by Integration Energy Argentina, SA and Korea Gas Corporation.
“For traders, prices are rising, and he is currently the driver of price,” said Sarah Bebehani, managing director of BEnergy Solutions DMCC in Dubai. Asian LNG rates rose sharply against the Dutch last year.
Where is the nearest exit?
The debate over the role of oil in energy transformation will intensify over the next several decades. In addition to being a high-carbohydrate ether, the entire natural gas value chain is exposed to methane, which threatens to intensify global efforts to prevent greenhouse gases.
There is growing pressure from investors, governments and consumers to strengthen their green credentials. Italian energy giant Inel Spa has set a deadline of 2040 to give up gas, the fuel is no longer competitive for electricity generation. France’s Labanki Postale plans to leave the gas industry by 2030, becoming the first bank to make that promise.
However, natural gas provides flexibility for renewable energy-based systems. It is less polluted than coal, and can be used to create blue hydrogen. BP Plc
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