While China is signing long-term contracts, Europe is still buying in cash: towards a further rise in the price of LNG? – Business AM

I look like Andrei Stiru
published on Friday 07 April 2023 To 20:15 •
3 min read

While Europe managed to import (more than) enough liquefied natural gas (LNG) by ship last winter to avoid an energy crisis, it may find it more difficult to do so this year.

Why is this important?

The European natural gas market was fundamentally reshaped last year following Russia invaded Ukraine. Indeed, before the war, the EU imported half of its natural gas from Russia. Today, it is forced to import natural gas by ship from the United States, Qatar, Nigeria and a multitude of other countries. In 2022, European LNG imports increased by 60% compared to the previous year.

The essential : in 2022, the EU mainly bought LNG on the spot market (also called spot), very expensive, but might not conclude enough long-term contracts with suppliers.

• In the short term, this provided enough natural gas to survive the winter. But by buying mainly in the spot market, the price has increased significantly. According to figures from the International Energy Agency (IEA), the EU spent 1



This premium article is for subscribers only

Become a subscriber and get immediate and unlimited access to all articles. Now from 1.99€/month.