How the bounce from Russian gas causes a scramble for global markets

Mr. de Oduardo sees LNG flows from the US to Europe already reaching two-thirds of this year’s bilateral target, and therefore should be “easy” to reach.

Washington has also relied on other countries, including Japan, to give up some of its shipments, which has led to a significant reduction in shipments to Asia from the United States, according to analysts. However, over time, this vineyard may be more difficult to sell, especially if the war in Ukraine continues indefinitely and markets tighten further.

“Under the current circumstances, I don’t think Japan has room to commit to long-term, sustained LNG shipments,” said Michitaka Hattori, director at the Japan Institute for Economic Studies of Russian and Newly Independent States.

The surest way to lower prices is to add more supply. Higher prices will encourage marginal increases in exports, but it usually takes more than two years to build gas processing facilities, such as the one Germany wants to build. Of course, demand for LNG, which grew 6 percent in 2021, is likely to continue growing as China and other countries switch to gas from polluting coal.

“I think the winter gas market will remain very tight due to Asia’s shift from coal to gas,” said Marco Alvira, CEO of Sanam, a large Italian energy company.

Cheniere Energy is moving ahead with a major expansion of its export facility in Corpus Christi, Texas. Qatar also says it is working on adding a massive block of LNG in the next five years.

However, developers will be wary about whether the current boom in Europe may fade long before the expiration of new LNG projects, which are generally expected to run for 20 years or more. European leaders insist they still view gas as a temporary solution before renewables such as wind, solar and hydrogen take over.

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“There is a question mark there about how much new gas will be needed,” said Mr Henderson of the Oxford Institute.

Ben Dooley And the makiko ino Contributed to reporting from Tokyo, and Melissa Eddy from Berlin.

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