Europe Isn’t Ready for Long-Term Commitment With LNG
Suppliers are happy to sign up new customers at reasonable prices — if they agree to keep buying 15 years from now.
LNG floating storage regasification units at the deepwater port in Eemshaven, Netherlands.
Photographer: Peter Boer/BloombergHello and welcome to Elements, our daily energy and commodities newsletter. Today, Bloomberg Opinion’s David Fickling examines how suppliers of liquefied natural gas want to lock buyers into long-term contracts, but European customers have a shorter time frame in mind. To hear what young climate activists are saying about COP27, listen here. For a look at how the upcoming World Cup rebuilt a market for dodgy carbon credits, click here. If you haven’t yet signed up to get Elements directly into your inbox, you can do that here.
Buyers and sellers in the liquefied natural gas market these days face a dilemma. The overwhelming marginal buyers — Europeans seeking to replace Russian piped molecules — are looking for supply now at the sort of affordable prices below $10 per million British thermal units that you’d get as a foundation customer of a new gas export project. Suppliers are happy to sign up new customers at reasonable prices — but only if they commit to still buy product 15 years from now.