European natural gas prices jumped on Tuesday following the announcement of the prolonged shutdown of a major terminal in Texas, which should reduce the volume of American exports of liquefied natural gas (LNG) to Europe for several months.
The Dutch TTF, the benchmark for the European natural gas market, soared to 100 euros per megawatt hour (MWh), for the first time in nearly three weeks. Around 4:30 p.m. GMT, it rose another 13.1%, to 99.295 euros.
Freeport LNG, which controls the terminal of the same name, located on the Texas coast, near Houston, announced on Tuesday that the fire which had affected its site last Wednesday would disrupt the export of LNG for a longer period than initially planned. . After reporting three weeks of shutdown, Freeport LNG is now counting on a partial reopening in 90 days, and anticipates that the site will not return to full production capacity before the end of 2022. This terminal provides, in normal times, the export of nearly 60 million cubic meters of LNG per day, i.e. more than 10% of the volumes exported by the United States.
Unlike European prices, American natural gas prices plunged on Tuesday following the announcement, dropping up to 18.5% compared to Monday, because the impossibility of exporting part of the production will increase the quantities available in the United States.
Since the early 2000s and the shale gas revolution, the United States has become a major exporter of natural gas.
In Europe, on the other hand, this new development threatens to deprive the continent of part of its gas imports, even as the European Union seeks to reduce its dependence on Russian gas, the main source of supply. so far. In addition, certain European countries having refused to pay for their purchases of Russian gas in roubles, the Russian giant Gazprom suspended its deliveries, in particular to Bulgaria, Poland and Finland.
In other news favorable to the rise in prices, Gazprom announced on Tuesday that it was cutting its daily gas delivery capacity to Germany by more than 40% via the Nord Stream gas pipeline, the necessary equipment having not been delivered by the German group Siemens. .
“It’s a mess“, commented Robert Yawger, an analyst at Mizuho Securities, regarding the prolonged shutdown of the Freeport terminal. Without sufficient gas, he said, European industry will have to use oil derivatives, which will weigh on the market for refined products, which is already under considerable pressure due to the sanctions imposed on Russia.
Another foreseeable consequence, according to the analyst, the greater than expected use of petroleum products, which cause more emissions than gas, will boost the carbon quota market. The costs “are going to be put into orbit because everyone is going to want to buy emission contracts.“
On Tuesday, the European carbon quota took a little more than 3% compared to the day before.
