RWE AG said it's struggling to secure long-term liquefied natural gas supply contracts as sellers hold out in the hope that prices will increase.
“Nobody wants to commit to long-term supplies just yet, certainly not away from Asia,” David Fuller, head of LNG at RWE Supply & Trading GmbH, said at the World LNG Summit in Barcelona yesterday. “It’s a buyer’s market out there but it sure doesn’t feel link one.”
Germany’s second-largest utility bought 50 percent of Excelerate Energy LLC, which develops low-cost LNG import facilities it calls Gasports. The company has import sites in countries including Argentina and Kuwait. A second terminal in Argentina is due to open in May.
Shale gas production in the U.S. has reduced global prices, Fuller said. In the past suppliers have signed long-term sales contracts when prices were low while now they prefer to sell spot cargoes into Europe under short-term deals, he said.
LNG supplies that were earmarked for North America are no longer going to end up there, as prices are too low, he said, creating opportunities for other companies to secure the gas.
RWE wants LNG cargoes to supply customers in Germany as well as new global markets opened up by Excelerate Energy, such as South America and the Middle East.