U.K., European Natural Gas Prices Leap As Texas LNG Terminal Fire Threatens Supply
2022.06.09 10:30
By Geoffrey Smith
Investing.com — Natural gas prices in the U.K. and continental Europe rocketed higher in early trading in Europe on Thursday, after a fire at an LNG export terminal in Texas threatened to cut off a vital supply channel for months.
By 2.50 AM ET (0650 GMT), the July U.K. natural gas futures contract on the ICE was at 174.18 pence a therm, up around 34% from Wednesday’s close, while the comparable price for northwest Europe, the Dutch TTF contract, was up by around 12% at 89.12 euros per megawatt-hour.
The fire broke out on Wednesday at Freeport LNG’s facility on Quintana Island near Houston, Tx. It was quickly brought under control and there were no casualties or injuries, but Bloomberg cited a company spokesperson on Wednesday as saying that shipments from the terminal could be disrupted for three months.
The availability of U.S. liquefied natural gas has become a crucial element of European gas supply in the last three months, as European buyers have scrambled to source alternatives to Russian pipeline gas in the wake of the invasion of Ukraine. Russian gas monopoly Gazprom (MCX:GAZP) has since cut off supplies to a number of ‘unfriendly’ countries that have refused to pay for their gas in rubles after the Kremlin unilaterally rewrote the terms of their contracts.
The U.K. price has reacted more extremely to the news because of its greater reliance on LNG imports, and of perceived difficulties, it would have in persuading Gazprom to ship more because of the country’s prominent role in sending arms to Ukraine since the start of the conflict.
