The natural gas import value decreased by 21.4% y/y in 5M24 and was mostly driven by the lower import price as the volume decreased only by 7.4% y/y- Galt&Taggart review reads.
In June 2024, natural gas price was down 5.3% m/m. Despite some minor ups and downs in the price, there were a few important political events for the industry during the month. The news primarily came from Russia, EU, and United States.
Russia’s share in EU gas imports may further decline. Five-year agreement between Russia and Ukraine to transit the gas to Europe expires at the end of this year. According to the officials, neither Ukraine, nor EU are interested in signing a new deal. Especially after Ukraine sealed a deal with US firm, securing LNG shipments. While providing Ukraine with a new stable source of gas, the deal also strengthens energy security of Eastern Europe and Europe as a whole.
Additionally, after losing the EU gas market, Russia struggles to find a stable large customer for its exports. Deal with China about the Power of Siberia 2 project is still not close to finalizing. Meanwhile, EU banned re-exports of Russian liquified natural gas (LNG). Although these volumes did not represent a large share of Russian LNG exports, decision still further weakens its reach to some markets. In order to counter the sanctions and exploit loopholes, Russia is trying to build a shadow fleet for gas. Shadow fleets have been successful in transporting oil, but will be much more difficult to use it for LNG shipments. Firstly, specialized LNG transporters are much less in numbers compared to oil tankers. Secondly, oil can be transferred from one tanker to another in the middle of the ocean, masking the origin. However, same process for the super-cooled LNG is a lot trickier, hardly possible.
As the US role in the supply chain grows, its energy politics is the crucial part of global LNG flow. Earlier this year Biden administration halted approvals for new export licenses for LNG, following the pressure from climate activists. Energy Department claimed the already approved licenses would not be affected, hence the gas supply to its strategic partners would continue uninterrupted. Industry players argued the decision would affect the trust in US supplies in the long term. In early July, federal judge halted the moratorium on new licenses, saying the Administration’s decision has no “reason or logic”. Although the court decision will not immediately affect the new license approvals, it is an important event for the global gas industry.
