Ships carrying liquid gas change course to lucrative Europe

lucrative Europe

This article was last updated on January 23, 2025

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Ships carrying liquid gas change course to lucrative Europe

If you sail in the middle of the Atlantic Ocean towards Asia or the Cape of Good Hope, you have to change course quickly towards Europe. It happened to captains of at least 7 American tankers with liquefied gas (LNG). “They then receive an email: this is your new destination and they immediately turn around,” says energy expert Jilles van den Beukel.

Instead of their original destination, they increasingly sail to Europe, where a higher price for gas is now paid than in other parts of the world. And whoever pays the most gets the gas. It works that way until the very end: a matter of global supply and demand.

Necessary

The fact that Europe is now the most lucrative destination for LNG is a direct result of the demand for liquefied gas, which has increased drastically since the war with Russia. Until ten years ago it was something that was imported piecemeal, but now it is necessary to keep the heating running or factories to produce.

“The gas is sold while sailing and the destination of a tanker is gradually determined. Fascinating, but that has been the case for years. It works the same with grains and coffee beans. What is new is the extent to which Europe has become dependent on liquid gas, which is a third of the total gas supply,” says Chris Guth, market analyst at energy company Engie.

Jilles van den Beukel also says that the normal market is doing its job here. “There is little gas in Europe for all kinds of reasons, most recently because of the remaining Russian gas part is missing. There was also little solar and wind energy in recent months. A kind of melting pot, causing the gas market to tighten and the price to rise.”

‘Mini crisis’

There is no question of a crisis such as in 2022, where a megawatt hour of gas was paid more than 300 euros at its peak and consumers were discouraged from turning on the heating at home, both experts say. “But you could say that what happened then is now happening on a small scale,” says Van den Beukel.

According to him, a shortage of gas is not the problem. “That gas will just come, but affordability is a problem. There is a price tag if you offer so much that it comes this way. It now fluctuates between 45 and 50 euros per megawatt hour, so a mini version from three years ago, but same effect.”

Future

By that effect he is referring to the price of gas, something that consumers and companies will also notice. “You will notice that sooner or later, depending on your contract,” says Van den Beukel. “And the energy-intensive industry in Europe notices it. It also affects the electricity price, as gas is a component of it.”

Both Guth and Van den Beukel expect that affordability will be less under pressure in the coming years, partly because companies in LNG-producing countries such as America have invested heavily. It is expected that this will make more liquefied gas available worldwide. “And then the market does its work,” says Guth.

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