LONDON (Bloomberg) -- The year has started off with a very cold bang, meaning Europe will have to pay a premium to stay warm.
European countries from France to Greece are losing out in a search for liquefied natural gas cargoes amid a freezing spell, as ships sail to buyers in Asia willing to pay a higher price to meet peak winter demand. The lack of LNG has prompted France’s grid to call for more of the fuel to be supplied by southern terminals and issue the highest warning level on supplies for a second day. Shortages were experienced in Turkey, and Spain also boosted gas usage.
It’s a sign of the times. The expansion of the LNG trade has allowed the fuel to break out of conventional regional markets and become a global commodity. While the growth has evened out access to gas worldwide, it’s hurt some buyers by ratcheting up competition among consumers during periods of increased demand.
“It’s amazing what a bit of cold weather does,” said Trevor Sikorski, an analyst at Energy Aspects Ltd., by email. “All markets are wanting gas at the moment.”
Buyers in northeast Asia, the biggest consumer, are paying a two-year high of about $9.90 per million British thermal units for spot LNG cargoes shipped from Qatar or the U.S., meaning European countries, where prices have typically been lower, need to pay more. Hub prices in France’s southern hub almost doubled over the past month to about $11.40 a million Btu on Jan. 9 on the Pegas exchange in Paris, the highest on record.
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