October 6, 2022

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Direct purchases in the United States to free themselves from the Netherlands

L ‘Europe Wants to empty the speculative bubble created on prices Gas on the continent. Buy together directly at United States of AmericaUS prices and from a long-term perspective. The commitment is written in black and white in Brussels’ political agreement with the United States to increase supplies of liquefied natural gas (LNG) with stars and stripes, and thus represents a sharp reduction in volumes coming from Russia, and thus the European Union depends on about 40% of its needs. Indeed, the text of the agreement talks about LNG supplies whose price formula must take into account the Henry Hub, the US market reference for methane prices, which are traditionally lower than their European counterparts. Address Transfer Facility (Ttf), a Dutch stock exchange index that specifies the terms of gas trading within the Netherlands network and all over Europe. Ttf will now be joined by Henry Hub (without replacing it). On the eve of the announcement, the value of the US benchmark was nearly seven times lower than that of the TTF – months after the Dutch platform saw the unstoppable price-racing champ – even if Henry Hub jumped 12% (at around €16 per megawatt-hour) following the formal agreement. On Friday by US President Joe Biden and European Commission number one Ursula von der Leyen who expects an additional 15 billion cubic meters of gas by the end of 2022 to reach a pace of 50 billion annually through 2030.

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According to qualified sources in Brussels, the new open borders of US gas (typically directed towards beneficial Asian markets) are made particularly attractive by the prospect mentioned among the “other stabilizing factors” mentioned in the agreement signed by the European Union and the United States. to conclude long-term agreements. Potentially a successful solution for both our overseas allies and importers, and of course businesses and families who will be paying lower bills.

Agreements
Long-term contracts are usually cheaper than buying gas on the spot market, on which Europe is increasingly dependent. Those who are well acquainted with the functioning of the LNG market are convinced that, even adding the significant operating costs of liquefaction, shipping and regasification prior to entering the grid and distribution to end consumers – technical stages – would increase the amount to be paid almost double – in the end, it would allow American liquefied gas for Europe with great savings compared to the price hike on the continent. The political commitment also has its own economic rationale, given that on the table there is the possibility for companies to buy directly in the United States, without intermediaries, by chartering gas tankers to transport LNG to Europe. And in light of the joint purchase contracts negotiated by the European Union to emphasize the weight of the single market and get better terms: in short, the lesson of supplying Covid-19 vaccines is being applied to gas.

the decision
What has been done with the United States could then soon be replicated with other international LNG suppliers, where pressure from Brussels has been intense for weeks. Yesterday, at the Doha Forum, Ukrainian President Volodymyr Zelensky spoke to Qatar, one of the world’s largest exporters, to invite it to play its part in European diversification plans, which it wants to close with Russian methane within the next five years. In the current long-term contracts, Doha has the ability to divert 15% of supplies to markets where it can be sold at higher prices, but it has ensured that Qatar will not benefit from the clause and will continue to send its liquefied natural materials. Gas for Europeans.