LNG could be “really, really tight” this winter: Cheniere

Oil Price

Limited global LNG supplies could be “really, really tight this winter, Cheniere Energy’s executive vice president for worldwide trading told Reuters on Thursday.

Source: Oil Price

Cheniere, the largest LNG exporter in the United States, believes that current prices indicate that LNG will continue to make its way to Europe, which has purchased 70% of Cheniere’s total production so far this year—and none too cheaply.

“At the current pricing, the market says that this should continue to go to Europe,” Corey Grindal said in an interview at the Gastech conference on Thursday.

The United States has increased its LNG exports to Europe as the later continues to grapple with natural gas supply concerns after Russia cut the flow of gas via its Nord Stream pipeline—and delayed the planned Nord Stream 1 restart.

LNG prices hit record highs last month as Russia restricted the flow of natural gas into Europe, causing a divergence between the spot price of LNG and the cost of LNG priced against oil—and those countries that rely on the spot market are finding themselves unable to pay those prices.

Cheniere has already sold about 90% of its LNG production this year via long-term contracts.

“At the end of the day, what’s going to decide how tight the market will be is how cold it is and how government policies, industry rationing work. ..There is still a lot of game to play,” Grindal said. And this winter’s weather in Europe’s LNG-buying rival, China, could determine how tight the global market will be—and incidentally, how much LNG is left for Europe to snag.

China has already secured multiple long-term LNG deals with Cheniere—the most recent a deal between Cheniere and PetroChina to supply 1.8 mtpa that runs all the way into 2050—the longest supply deal Cheniere has struck yet.

By Julianne Geiger for Oilprice.com