ASX News Live | ASX ends down 1.4%; Lake Resources appoints CEO

Something interesting is happening in the LNG market

European countries rushed to fill their natural gas storage sites before the cold hit. Europe uses these gas storages to help with energy shocks, but they also provide around 25-30% of the fuel Europe uses in the winter.

The EU had set itself the target of filling 80% of its natural gas storage tanks by November 1. Now the good news is that Europe has reached this target two months ahead of schedule. Currently, gas storages are at almost 82%.

The new objective is therefore to reach 95% by 1 November.

But of course, with the now stopped Nord Stream 1 flows, the big concern is not just how Europe will get there, but also how they can replace natural gas from Russia.

Europe has tried to replace Russian energy with other energy sources such as renewable energy, nuclear energy and increasing imports of liquefied natural gas (LNG).

Today, the EU is building several LNG import facilities… which is not good news for Russia.

But of course, all of this takes time.

According to Bloomberg research, the EU needs around 118 million tonnes of LNG to replace Russian gas. But their current LNG infrastructure can only handle about half of that.

Not only that, but Europe also faces competition from Asian buyers. In fact, China has been a big buyer of Russian gas, with its Russian LNG imports increasing by almost 30% this year alone.

And then, of course, there is the question of where all this imported LNG really comes from…

Here is the price of oil:

China is quietly reselling Russian LNG to the one place that desperately needs it more than anything. Europe… and of course it charges a kidney in profit margins in the process.

As the FT reported recently, “Europe’s fears of gas shortages heading into winter may have been sidestepped, thanks to an unexpected white knight: China.” The Nikkei-owned publication further notes that “the world’s largest buyer of liquefied natural gas is reselling some of its excess LNG cargoes due to weak energy demand at home. This provided the spot market with ample supply which Europe exploited, despite the higher prices.

What is the FT ignores is that this is not a “surplus” – after all, if it were, Chinese imports of Russian LNG would collapse. No — the correct word to describe the LNG that China sells to Europe is Russian.

Not to mention that LNG still makes Europe dependent on gas imports which have to travel long distances.

The best solution is to develop renewable energies. But we could do much more.

Energy Wars could boost this ‘boring’ sector