Belgium, (Brussels Morning Newspaper) Tens of liquefied natural gas (LNG) tankers are unable to unload in the EU and are queuing off the coasts of bloc members.
The number of EU’s LNG regasification plants is the choke point as the bloc looks for alternatives to Russian fossil fuel imports, according to Reuters reporting on Monday.
Traders and analysts note that more than 35 tankers are anchored off the coast of Spain and around the Mediterranean, of which at least eight off the Bay of Cádiz.
The backlog raises concerns about the EU’s capacity to process LNG cargoes needed to substitute Russian imports. Spain has six LNG terminals, accounting for roughly one third of terminals in the EU.
Alex Froley, an analyst at ICIS data intelligence firm, noted “we have seen a high number of cargoes waiting offshore in southern Spain or circling in the Med, as well as some cargoes waiting off the UK.”
Prices expected to rise
He added that markets expect natural gas prices to continue rising as demand increases in the heating season, noting that some tankers are waiting to fetch a higher price.
“This strategy partly works because some companies have flexibility in their shipping portfolios due to outages like the closure of the US Freeport plant,” Froley pointed out.
The Freeport LNG terminal in Texas stopped working in June this year due to an explosion and is expected to come online next month.
Froley noted that “companies might not be able to leave their ships waiting around so long” if output of LNG cargoes was higher.
Also on Monday, China ordered its companies to stop reselling LNG to secure its supply ahead of the heating season.
China became the largest LNG importer last year, overtaking Japan. Chinese President Xi Jinping on Sunday stressed the importance of proceeding with the green transition carefully to avoid an energy crisis.
China’s decision to stop reselling LNG could push tankers towards Asia and exacerbate the crunch in the EU, according to traders.
Chinese LNG companies have large purchase contracts with exporters and have diverted some supplies to Europe earlier this year due to relatively low domestic demand.
