Intense Global Natural Gas Battle Ahead of Winter... Prices Soar Rapidly

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Amid the global 'energy crisis' and soaring natural gas prices, a fierce scramble to secure natural gas is underway ahead of the winter demand season.

The Wall Street Journal (WSJ) reported on the 7th (local time) that in some cases, ships carrying natural gas have abruptly changed their routes to other customers for higher profits.

According to sources, as the competition to secure natural gas intensifies, an LNG carrier leased by Royal Dutch Shell abruptly changed its course last month in the Strait of Gibraltar at the southern tip of Spain.

While en route to Asian customers, it received an urgent order to change course to Rotterdam, Netherlands, and made a U-turn.

Another LNG carrier, the 'Gaslog Salem,' also suddenly changed its route to the Mediterranean last week after departing the Gulf and heading toward Asia.

Industry insiders explained that shipping companies sometimes suddenly change or cancel the transportation order of natural gas, risking compensation to existing customers, in pursuit of higher profits.

With limited natural gas supply, countries in Europe and Asia are fiercely competing to fill their tanks ahead of winter.

Global natural gas inventories have already declined, and due to increased demand and supply chain disruptions, natural gas prices in Europe and Asia have surged to record highs.

According to energy information provider Kpler, global liquefied natural gas (LNG) demand increased by 5.3% year-on-year through September this year.

On the other hand, natural gas supply is struggling to respond quickly to demand due to the time required for production facility expansions and the impact of hurricanes.

In Brazil and other countries, hydropower generation has been limited due to droughts, leading to increased imports of natural gas for power generation. Additionally, as natural gas prices soared, some countries have increased thermal power generation using coal and oil, causing rises in coal and crude oil prices.

According to energy and commodity information company Standard & Poor's (S&P) Global Platts, the price of natural gas in Europe per 1 million BTU (British Thermal Units) rose nearly threefold from $6 on February 18 to $17.1 as of August 10.

Earlier, on the 6th, the Japan-Korea Marker (JKM), an LNG price indicator for the Northeast Asian region, surged 42.0% in one day to $56.326 per 1 million BTU for November shipments.

WSJ expressed concerns that such a sharp rise in energy prices could trigger inflation fears and act as a negative factor for the global economy, which is recovering after the COVID-19 pandemic.

In fact, there have been cases where factories have halted or reduced operations due to the surge in energy prices.

This content was produced with the assistance of AI translation services.