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  #2401  
Old 22.02.2022, 18:24
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Re: World War 3 or just a local spat in Ukraine?

In the last 3 years look who has entered the EU liquified natural gas market. Now Russia is busy in Ukraine, and the US will sell us its gas by the very high prices. What a nice story.

https://www.eia.gov/todayinenergy/detail.php?id=51358

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In 2021, a large share of Europe’s supply of liquefied natural gas (LNG) originated in the United States, Qatar, and Russia. Combined, these three countries accounted for almost 70% of Europe’s total LNG imports, according to data by CEDIGAZ. The United States became Europe’s largest source of LNG in 2021, accounting for 26% of all LNG imported by European Union member countries (EU-27) and the United Kingdom (UK), followed by Qatar with 24%, and Russia with 20%. In January 2022, the United States supplied more than half of all LNG imports into Europe for the month.
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Old 22.02.2022, 18:26
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Re: World War 3 or just a local spat in Ukraine?

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2k EUR per 1k cubic meter is an increase vs. prior year, BUT:
1. It's not 10 times because of Ukraine, it was already very high even towards the end of last year mainly due to surging demand as economies recover post Covid and supply scrambling to meet demand.
2. around 1/3 of the gas in Europe comes from Russia, no small amount undoubtedly, but this will not mean in any way there will be no gas in Europe. There will be. It will be more expensive, but again, it will be more expensive anyway
An increase vs prior year? Yes, of 500%. And no, it is not only because of Ukraine. But I would say there is a 30% risk premium in the current price that is not justified by fundamentals.

I am not against sanctions. But to pretend the energy landscape of Europe can afford to replace Russian oil and gas is an illusion, in my view.
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Old 22.02.2022, 18:27
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Re: World War 3 or just a local spat in Ukraine?

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No, because oil and gas are actually plentiful but as a civilization we're making the slow, tough and conscious choice to move away from fossil fuel. We'll manage
Plentiful, yes.. but, it‘s starting to cost more to extract the energy than you get by using the energy gained. And that is without upsetting the status quo. Like it or not unless we develop the tech to create a giant mutant hamster in a wheel, we need fossil fuel.
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Old 22.02.2022, 18:29
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Re: World War 3 or just a local spat in Ukraine?

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In the last 3 years look who has entered the EU liquified natural gas market. Now Russia is busy in Ukraine, and the US will sell us its gas by the very high prices. What a nice story.

https://www.eia.gov/todayinenergy/detail.php?id=51358
Can we just stop with all the myths please? The US does not sell gas to us at high prices. Almost all the LNG from the US is contracted by international majors (Shell, BP, Asian utilities etc) which buy from US producers at US prices and sell at market prices in Asia and Europe. "The US" does not gain from high prices in Europe, it will be these companies who committed to 20 year firm contracts.
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Old 22.02.2022, 18:33
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Re: World War 3 or just a local spat in Ukraine?

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An increase vs prior year? Yes, of 500%. And no, it is not only because of Ukraine. But I would say there is a 30% risk premium in the current price that is not justified by fundamentals.

I am not against sanctions. But to pretend the energy landscape of Europe can afford to replace Russian oil and gas is an illusion, in my view.
Whether it's 30%, 3% or 300% is a matter of pure speculation. Undoubtedly it has a huge impact, but prices were going crazy even before anyone can even fathom what going on now and people are left with the impression that price increase vs. say 12 months ago is solely because of Ukraine. Right now it's not even about fundamentals at all, it's about complete lack of uncertainty what will Russia do and how will Europe respond which adds more volatility. I speculate that once the dust settles in the coming weeks, prices will stabilize, undoubtedly at a high level, but volatility will decrease.

No, Europe cannot replace the Russian oil and gas at the "older" prices, but it can replace the volume at higher prices. Nobody in Europe will have to stay without Chinese takeaway and cold because of Russia. We will pay more, but we will have gas.
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Old 22.02.2022, 18:40
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Re: World War 3 or just a local spat in Ukraine?

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No, Europe cannot replace the Russian oil and gas at the "older" prices, but it can replace the volume at higher prices. Nobody in Europe will have to stay without Chinese takeaway and cold because of Russia. We will pay more, but we will have gas.
Impossible in the short term, frankly.

Europe imported record amounts of LNG in January at super high prices, and Europe in total still had more than 20% of gas coming from Russia. Without a very warm January in Asia, this would not have been possible. And we had warm weather also.
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Old 22.02.2022, 18:43
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Re: World War 3 or just a local spat in Ukraine?

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Whether it's 30%, 3% or 300% is a matter of pure speculation. Undoubtedly it has a huge impact, but prices were going crazy even before anyone can even fathom what going on now and people are left with the impression that price increase vs. say 12 months ago is solely because of Ukraine. Right now it's not even about fundamentals at all, it's about complete lack of uncertainty what will Russia do and how will Europe respond which adds more volatility. I speculate that once the dust settles in the coming weeks, prices will stabilize, undoubtedly at a high level, but volatility will decrease.

No, Europe cannot replace the Russian oil and gas at the "older" prices, but it can replace the volume at higher prices. Nobody in Europe will have to stay without Chinese takeaway and cold because of Russia. We will pay more, but we will have gas.
Hmm! You are of course correct. Just thinking about the weakest link though, the people who were struggling before now.
At some point social systems break down. Not now hopefully, but at some point the gap will become unbridgable.
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Old 22.02.2022, 18:47
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Re: World War 3 or just a local spat in Ukraine?

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Impossible in the short term, frankly.

Europe imported record amounts of LNG in January at super high prices, and Europe in total still had more than 20% of gas coming from Russia. Without a very warm January in Asia, this would not have been possible. And we had warm weather also.
Wait, I'm not sure what the argument is? Russia will almost certainly continue to supply Europe in the coming months, provided of course, they don't stop themselves, which would be suicidal for them as well. NS2 was never operational anyway, it never transferred gas so far. For me the "short term" is next winter.
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Old 22.02.2022, 18:53
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Re: World War 3 or just a local spat in Ukraine?

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2000 Euro per 1000 cubic meter is roughly 10 times the historic average wholesale gas price in Europe.
So, was there a time where you could heat up your single unit home for several months, even probably the whole winter, for 200€? I get there's a difference between 200 and 2'000. However, the context is that 200 is close to nothing while 2'000 will not cause the bankruptcy of single unit home owners. Is it a problem? Yes. But, considering people is fighting, dying and borders being moved...a few hundred € is not the worst for homeowners.

The industry is a whole other issue. Energy price variations can make local industry competitive or not. But, industrial customers hedged for this, or at least should have hedged for this.
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Old 22.02.2022, 19:37
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Re: World War 3 or just a local spat in Ukraine?

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Low at the moment?
Natural gas currently 4.6 versus 6.3 US dollars per MMBtu as recently as October.
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Old 22.02.2022, 20:53
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Re: World War 3 or just a local spat in Ukraine?

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Natural gas currently 4.6 versus 6.3 US dollars per MMBtu as recently as October.
LOL. This gas is in the US. European prices are currently around 25 USD/mmbtu.
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Old 22.02.2022, 21:00
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Re: World War 3 or just a local spat in Ukraine?

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Wait, I'm not sure what the argument is? Russia will almost certainly continue to supply Europe in the coming months, provided of course, they don't stop themselves, which would be suicidal for them as well. NS2 was never operational anyway, it never transferred gas so far. For me the "short term" is next winter.
The argument is that putting up hardcore sanctions or potentially even having to look at military options kind of sucks if you cannot survive a winter without the enemy's energy supply. I thought you a implied we could completely replace Russian supplies.
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Old 22.02.2022, 21:06
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Re: World War 3 or just a local spat in Ukraine?

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The argument is that putting up hardcore sanctions or potentially even having to look at military options kind of sucks if you cannot survive a winter without the enemy's energy supply. I thought you a implied we could completely replace Russian supplies.
Well, the sanctions just announced by the US seem to be "mild" and most probably staged in anticipation for further invasion in Ukraine proper so they can announce harder ones after that.

Of course, no way to replace Russian supply overnight, it just doesn't work that way.


According to CNN

"We're implementing full blocking sanctions on two large Russian financial institutions: VEB and their military bank."
"We're implementing comprehensive sanctions on Russia's sovereign debt. That means we've cut off Russia's government from Western financing. It can no longer raise money from the West and can not trade in its new debt on our markets or European markets either."
"We'll also impose sanctions on Russia's elites and their family members. They share in the corrupt gains of the Kremlin policies and should share in the pain as well."
"We've worked with Germany to ensure that Nord Stream 2 will not ... move forward."
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Old 22.02.2022, 21:09
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Re: World War 3 or just a local spat in Ukraine?

The real question here is, can Russia supply us with gas at a correct price without taking us hostages to her imperialist ambitions?


Yes? No?


Opinions?


If so, why?


I am all for fair exchanges and commerce, provided you do NOT mingle with my (our) affairs.
My home country pays the highest price in Europe for the Russian gas anyway, so I'm used. Sometimes you have to pay the price.

Last edited by greenmount; 22.02.2022 at 21:19.
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Old 22.02.2022, 21:19
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Re: World War 3 or just a local spat in Ukraine?

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"We've worked with Germany to ensure that Nord Stream 2 will not ... move forward."
What a stupid comment. Why not “Thanks to Germany etc”

F* arrogant **
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Old 22.02.2022, 21:21
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Re: World War 3 or just a local spat in Ukraine?

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What a stupid comment. Why not “Thanks to Germany etc”

F* arrogant **
Ehhhrm....what?

You mean Germany is doing what they are supposed to do within EU i.e. take their EU partners into consideration?

Come again? I am not hearing you.
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Old 22.02.2022, 21:25
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Re: World War 3 or just a local spat in Ukraine?

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The real question here is, can Russia supply us with gas at a correct price without taking us hostages to her imperialist ambitions? .

What do you mean "correct" price? The prices have been increasing due to economic post-covid recovery (over 400% last year) and the Ukraine invasion just adds more volatility to an already tight market. The spot price is what it is, long term contracts are a different matter, but according to analysts Gazprom has roughly between a quarter and half of it's volume sold on the spot market (this is not public info, Gazprom doesn't share this).
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Old 22.02.2022, 21:29
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Re: World War 3 or just a local spat in Ukraine?

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What do you mean "correct" price? The prices have been increasing due to major driven by economic post-covid recovery (over 400% last year) and the Ukraine invasion just adds more volatility to an already tight market. The spot price is what it is, long term contracts are a different matter, but according to analysts Russia has roughly half of it's volume sold on the spot market (this is not public info, Gazprom doesn't share this).
Most long term gas contracts, including Gazprom's, into Europe are indexed to the Month Ahead price, so very close to spot. And now Gazprom hardly sells anything on the spot market - this is the supply that is missing.
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Old 22.02.2022, 21:37
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Re: World War 3 or just a local spat in Ukraine?

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Most long term gas contracts, including Gazprom's, into Europe are indexed to the Month Ahead price, so very close to spot. And now Gazprom hardly sells anything on the spot market - this is the supply that is missing.
I have no visibility on Gazproms spot sales but I doubt they're not selling anything now, why would they forego the profits? At almost 100% capacity in December Gazprom was delivering to the spot market, I doubt they've reduced volumes, it just won't make sense.
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Old 22.02.2022, 21:43
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Re: World War 3 or just a local spat in Ukraine?

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I have no visibility on Gazproms spot sales but I doubt they're not selling anything now, why would they forego the profits? At almost 100% capacity in December Gazprom was delivering to the spot market, I doubt they've reduced volumes, it just won't make sense.
Of course it makes sense. They keep the price high and get the same or higher revenue on less volume. And they keep Europe scared that it will run out of gas. And what 100% capacity in December? Of the transport they have booked? Of course they use this, but they book very little. You can see this in the monthly capacity auctions. Which also serves to reduce revenue to Ukraine.
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