LIVE MARKETS-LNG wave is coming, just not right now

By Reuters News

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LNG WAVE COMING, JUST NOT RIGHT NOW

European and Asian gas prices may at their highest in around 3 years, as geopolitical tensions keep traders focused on supply security, but Rabobank believes the longer-term outlook still points to lower prices as a wave of new LNG capacity comes online.

The bank says the recent surge in benchmark Dutch TTF and Asian JKM gas prices reflects concerns over disruptions linked to tensions in the Middle East and the Russia-Ukraine conflict, rather than a fundamental shortage of future supply.

Rabobank notes that low European gas storage, reduced Qatari flows and risks to Strait of Hormuz shipping have placed a substantial risk premium, with any further escalation likely carrying the potential of even higher prices.

However, new LNG projects due to start up over the next few years should ease those concerns, and today's volatility does not mean we're in a permanently tight market, it says.

"The LNG supply wave expected before the war has been delayed and reshaped, but it has not disappeared," writes Joe DeLaura, global energy strategist at Rabobank.

"New liquefaction capacity outside the Gulf is ramping at a pace that will progressively reduce the market’s dependence on Qatar and reduce the premium Europe and Asia must pay for marginal cargoes."

The bank forecasts that TTF gas prices will more than halve towards €38-42 per megawatt hour through much of 2027 as additional LNG capacity becomes available, with North America doing the heavy lifting, alongside projects in Canada, Nigeria and Russia.

Roughly 40 million tonnes per annum of non-Qatari export capacity can reach the markets next year, followed by another 50 million in 2028.

(Danilo Masoni)

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rabobank LNG https://tmsnrt.rs/4z1bvvx

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