Carry more than 35 ships liquefied natural gas (LNG) circling off the coasts of Spain are reportedly unable to secure slots to unload their cargo, prompting grid operators to warn they may have to suspend loading, according to a Reuters report.
As Europe grapples with an energy crisis Wladimir PutinDue to the ongoing reduction in the flow of gas through Russia, the region is increasingly looking for alternative sources, which include LNG. However, the plants that convert the fuel back into gas are working at the limit, reported Reuters.
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If the backlog is not cleared at the earliest, these ships could start looking for alternative ports outside of Europe to unload their cargo, the report said.
The price of an LNG cargo delivered in late November or early December is almost $2/mmBtu higher than current prices, Reuters reported. That Global X MLP & Energy Infrastructure ETF MLPX has gained over 10% since the beginning of the year while the Vanguard Energy Index Fund ETF VDE has increased by over 42% over the same period.
Regasification Terminals: Spain is offering just six slots at its cargo regasification terminals this week, the report said, citing an industry source. That’s less than a fifth of the number of ships that dock on its shores.
Expert Take: Alex FroleyLNG Analyst at a data intelligence company ICIS believes one reason for the congestion, according to Reuters, is that prices are expected to rise as winter approaches and demand for heating increases. Some ships are waiting to sell their cargo at a higher price to offset the additional shipping costs of sitting offshore, he said.
Continue reading: Why Europe Can’t Use Its Largest Gas Field To Dodge Putin’s Supply Cuts
