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UK to import record levels of liquified natural gas

January 27, 2022

By Paul Homewood

 

All of the UK’s major parties want to put an end to North Sea oil and gas. So how is that working out?

 

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The UK is on track to import an unprecedented amount of liquified natural gas this month amid a scramble for supplies as fears grow over a Russian invasion of Ukraine. 

Monthly imports of gas shipped in from around the world are likely to eclipse former records by Wednesday and could finish the month 19pc higher than any previous one, experts believe.

Most of the gas is coming from the US, but there have also been shipments from Qatar and Nigeria. 

The UK has increasingly turned to the highly competitive global LNG market in recent months amid a global shortage in gas supplies which have helped drive a six-fold rally in price.

oil

Russia has been accused of adding to the problem by withholding extra pipeline supplies to Europe. A Russian attack on Ukraine could disrupt supplies further as it is a key transit country.

Adam Lewis, a partner at energy trading company Hartree Solutions, said: “With these higher imports and seasonal normal European weather conditions, the UK looks more comfortable than it did several weeks ago.

“Yet we remain exposed to colder conditions or a worsening of the situation in Ukraine, risks the market is trying to price into its energy prices.”

The UK gets most of its gas from pipes connected to the North Sea, Norway and Europe. Around 20pc arrives in the form of LNG shipped in from around the world.

More shipments from the US started to head to the UK and Europe in December last year, as soaring wholesale gas prices meant the region was a more lucrative market than Asia.

Tom Marzec-Manser, an analyst at the market intelligence group Icis, said the UK is on track to beat the previous monthly record for LNG imports – 2.1 million tonnes (mt) – by Wednesday, and could end up importing 2.5mt by the end of the month based on Icis LNG ship-tracking data.

S&P Global Platts Analytics echoed the forecast of a record, saying that nine shipments are expected before the end of the month.

Mr Marzec-Manser said 1.4mt of the UK’s imports this month have come from the US. That is well ahead of the previous monthly record of 800,000 tonnes of LNG coming to the UK from the US, in December 2020.

Those supplies have helped to soften gas prices which have been high for months owing to a global shortage as the world came out of lockdown.

Russia denies any manipulation, stressing it has met all contractual obligations. Last year it sent 29 shipments of LNG to the UK, up from 22 in 2020.

Wholesale gas prices in Britain climbed 17pc on Monday as tensions over Ukraine grew.  

Christopher Ward, senior energy broker at Britannia Global Markets, said: “With tensions on Ukraine’s border with Russia continuing to ratchet up, both in terms of military presence and rhetoric, energy supply uncertainty in the UK and Europe does not look like easing soon.

“The combination of US sanctions, coupled with Russia’s seeming willingness to use gas flows into Europe as a bargaining tool, could continue to drive energy markets higher.”

https://www.telegraph.co.uk/business/2022/01/24/uk-braces-new-energy-crisis-ukraine-tensions-mount/

48 Comments
  1. William George permalink
    January 27, 2022 7:55 am

    Having listened to Sharma refuse to open up our extensive reserves, this folly will continue.
    Ultimately there will be a train smash when all this government’s ridiculous agenda hit the buffers.

  2. Ron Arnett permalink
    January 27, 2022 9:07 am

    ……..could disrupt supplies further as it is a key transit country……… referring to a possible war in the Ukraine.

    **Could*** Are people nuts? Boris Johnson just lovingly described how **all** Russian natural gas and **all** Russian products of any kind will be blocked from entering all western countries. He said it in Parliament when outlining government policy.

    That will be accomplished by freezing Russia out of all financial transactions. No one will be able to pay Russia for goods even if they wanted to because all such transactions will be blocked. Anyone who violates it will find their own financial system blocked from functioning in the west.

    High prices and low availability for natural gas will be small potatoes when that policy comes into effect. What he is proposing is the end of the global financial system. There will be two systems in place. One financial system run by and for the west. There will also be another system for every body else.

    China will have both systems since no one can afford to deny China participation in their system. China will be loving it. And so will countries who feel they haven’t done well in their experience with the West’s system and can walk away from their massive debts just by joining the other side and starting fresh.

    Of course, Muslim countries have been dreaming for years of being free of what they consider the immoral, evil western financial structures. The radical Muslims will be happy to remove any authority figures who get in the way of finally achieving the chance to participate in something closer to their moral code. Not to mention walking away from their massive debts also which even if not too burdensome are seen as being like a cancer.

    War with Russia for whatever reason will take all Russian connected natural gas off the western markets. Period. Aside from Johnson’s stupidity, Russia wouldn’t provide natural gas to fuel the economic engine of the countries attacking it, even if those countries tried to buy it. Johnson’s stupidity is confined to thinking it is a good thing to do even before the war starts.

    There is no could involved. There is only must.

    • Sobaken permalink
      January 27, 2022 1:51 pm

      Neither Russia, nor the Muslim countries (I assume you mean Iran, Syria, and the like, because there are some other Muslim countries that are happily allied with the US despite ideological differences) are interested in being excluded from the Western markets.
      China’s demand alone does not cover all that oil and gas production, and countries that are not friendly with China, such as India, will rather align themselves with the West.
      On top of that, oil and gas exporters are hugely dependent on imports of consumer goods and industrial machinery, and while a large portion of that comes from China, it will not cover all the demand. Especially with China incentivized to sell to the rich West or to neutral states, rather than to now impoverished authoritarian countries who don’t even have enough Chinese currency (that they can only get by selling resources to China) to buy the goods. With goods shortages and economic collapse on one hand, and closed borders (preventing the discontent dissidents and radicals from moving out of the country) on the other, Russian internal stability will not hold for long. Especially with Russia having to provide security for Kazakhstan, Belarus, and others in the Russian sphere of influence.
      Likewise, the West isn’t interested in turning a quarter of the world into North Korea 2.0. While all the sheiks and oligarchs reside in their extravagant London mansions, deposit all their uncounted billions in Swiss banks, and send all their children to study in prestigious American universities, the West has leverage over the authoritarian countries. In case of isolation, that leverage is lost completely, and there isn’t much stopping Russia or any of other isolated regimes from further war and expansion, except retaliatory violence.
      And then there is the energy crisis. Without fossil fuels from the Middle East and Eurasia, Europe will freeze and starve. European politicians aren’t as dumb as to allow it, so they will change course and start exploring for hydrocarbons at home. But those will be some rough years until new extraction capacity comes online and all the “green” dreams are abandoned.
      In short, the whole scenario with escalation to conflict is highly unrealistic for multiple reasons. In all likelihood there will be no war. Even if there is going to be one, however improbable it may be, it will be more like the 2008 Russian-Georgian war, with limited response from the West in the form of more sanctions, but not isolation and SWIFT cut off. But much more likely a diplomatic solution will be found, or at least everything will return to how it was before.

      • Phil D permalink
        January 27, 2022 2:49 pm

        ‘…but not isolation and SWIFT cut off. But much more likely a diplomatic solution will be found, or at least everything will return to how it was before.’

        This.

        There are no plans to freeze Russia out of SWIFT, regardless. What we are currently seeing is Olympic-standard sabre rattling. There will be no invasion.

      • bobn permalink
        January 27, 2022 11:26 pm

        Sobaken: You are an optimist.
        “European politicians aren’t as dumb as to allow it, so they will change course and start exploring for hydrocarbons at home.”

        No sign yet that they aren’t that dumb. In fact every passing day shows they are! And getting dumber!!

      • ron permalink
        February 1, 2022 6:16 pm

        Phil D
        …..There are no plans to freeze Russia out of SWIFT, regardless. ……

        Clearly you haven’t been watching Americian T.V. While a powerful minority are calling for exclusion from Swift, the mainstream is calling for freezing the Russian banking system out of the international system which is basically pretty well the same thing. Also being discussed is seizing the assets and accounts of wealthy Russians doing business in the west. They frequently specifically mention the Chelsea football club.

  3. January 27, 2022 9:13 am

    No prizes for guessing why gas-hungry Germany doesn’t want to get involved in the Ukraine issue.

    • Thomas Carr permalink
      January 27, 2022 11:48 am

      Its a b******** for the German Greens who over-reach themselves in their government. The security of gas supplies in conflict with the green agenda.

    • Ben Vorlich permalink
      January 27, 2022 1:58 pm

      It doesn’t matter whether they want to get involved or notm they will be. Belgium, Norway and Holland found out that not wanting to be involved doesn’t stop someone else involving you.

  4. January 27, 2022 9:17 am

    There is no cure for stupid, otherwise we would be self-sufficient in gas and oil, with lots of fracking and new offshore gas and oil-wells and lots of storage. Stupid is there, embedded in all main political parties.

    • Harry Passfield permalink
      January 27, 2022 10:24 am

      Yes, Phillip, isn’t it strange how the fools bang on about battery-storage, which would cost more and need greater infrastructure, while ignoring the need for gas storage.

      • January 27, 2022 9:47 pm

        The two are not directly comparable. Gas is a fuel, a battery isn’t.

  5. john cheshire permalink
    January 27, 2022 9:20 am

    This is what happens when low grade people are allowed into positions of power.
    I think it was Plato who said words to the effect, if you do not engage in politics you are letting your inferiors rule over you.

    • Thomas Carr permalink
      January 27, 2022 12:07 pm

      It does not end there. Mini despots are emerging from the cohort of pension fund managers.

      The Sunday Times has just reported that Aviva Investor’s chief executive says that Aviva will hold the boards of companies and individual directors, in which Aviva are investing, accountable to commitments on climate change ( and bio diversity and human rights) if the pace of change does not reflect the urgency required.

      Aviva will vote against the election of such directors who do not comply.

      Further, Aviva wants those companies in which Aviva is investing to commit to reaching net zero targets and wants to see their progress in achieving them.
      Virtue signalling run amock.

      • roger permalink
        January 27, 2022 3:57 pm

        An attitude which in the past five years has been reflected in their sclerotic share price.

  6. Vernon E permalink
    January 27, 2022 10:41 am

    This headline announcement is rather puzzling because, as far as I know, there are only two import terminals, one at Isle of Grain and one at Milford Haven. If there are more I’d like to hear – I may be well out-of-date on this. The turnaround for an LNG tanker is at least five days so that would be twelve shipments a month. Any more than that and safety is compromised.

    • January 27, 2022 10:43 am

      We also have the Isle of Grain terminal

      https://www.nationalgrid.com/national-grid-ventures/grain-lng

    • January 27, 2022 10:59 am

      Ooops – ignore my first response.

      Milford Haven has two terminals:

      https://www.dragonlng.co.uk/#

      https://www.southhooklng.com

      South Hook is on the former Esso refinery facility, and Dragon LNG is on what was a brownfield site of the Gulf oil refinery.

    • It doesn't add up... permalink
      January 27, 2022 11:35 am

      There are three import terminals. South Hook, Milford Haven can berth two ships at once (and it has done so occasionally recently). Dragon, Milford Haven can only take one vessel at a time. I think Grain may also be capable of taking two vessels at once, and it has export/ship to ship transfer capabilities as well.

      I’ve noted that despite the continuous flow of shipping LNG tankage has been getting no fuller. It’s being used straight away, which suggests offshore production from Norway and the UKCS hasn’t been everything it might have been. Some volumes have been exported to Europe via the interconnectors when the weather has been milder.

      • Vernon E permalink
        January 28, 2022 11:01 am

        Thank you both for your replies. This subject is dear to my heart because in the early 2000s I embarked on personal campaign against the planning approval for the IOG project. A journalist was on the same journey in Milford. I viewed the planning application at Medway Council and it was devoid of any proper hazard analysis and, pstrticularlty ignored the hazard of the USS Richard Montgomery wreck at the Medway approach. The approvals were demanded by Blair and Prescott. The IOG terminal, specifically, is illegal because the Hazardous Substances Act makes it clear that if gas is involved the approval is out of the hands of local authority and must go to the Secretary of State – which it did not. Worth noting that the UK’s first LNG terminal at Canvey Island was retrospectively subjected to Hazard Analysis by the Atominic Energy Authotrity (the only competent body at the time) and the risks were assessed as far greater than acceptable and the terminal was closed. Food for thought.

  7. January 27, 2022 10:41 am

    “Russia has been accused of adding to the problem by withholding extra pipeline supplies to Europe ….”

    Russia has been wrongly accused.

    Russia has honoured its gas flow obligations via the Nord Stream 1 pipeline.

    The Germans, with US encouragement, played silly-buggers.

    Dec 2020: “New US measures designed to derail completion of the Nord Stream 2 pipeline from Russia to Germany will not go into effect until after 29 December as President Donald Trump vetoed the broader legislation of which the sanctions formed part.

    The proposed sanctions would narrowly target companies building the offshore portion of the near-complete 55bn m³/yr Nord Stream 2, as well as entities that provide underwriting and insurance to pipe-laying vessels and facilitate ship retrofitting and upgrading. The sanctions also could apply to any entity that “provided services for the testing, inspection or certification” of the pipeline.”

    https://www.argusmedia.com/en/news/2171953-trump-veto-delays-nord-stream-2-sanctions

    Nov 2021: “Germany’s energy regulator has suspended the approval process for a major new pipeline bringing Russian gas into Europe, throwing up a new roadblock to the contentious project and driving up regional gas prices.

    The watchdog said on Tuesday it had temporarily halted the certification process because the Swiss-based consortium behind Nord Stream 2 first needed to form a German subsidiary company under German law to secure an operating licence.”

    https://www.reuters.com/business/energy/german-energy-regulator-suspends-nord-stream-2-certification-makes-demands-2021-11-16/

    Nov 2021: “The German energy regulator said it would not continue its approval process until the Nord Stream 2 company, which is registered in Switzerland, transfers its main assets and staffing budget to its German subsidiary.

    “A certification for the operation of Nord Stream 2 will only be considered once the operator is organised in a legal shape compliant with German law,” the regulator said.”

    https://www.theguardian.com/business/2021/nov/16/germany-suspends-approval-for-nord-stream-2-gas-pipeline

    Russia originally offered the Germans longer-term supply contracts, but the Germans declined their offer – expecting global gas prices to fall, and underestimating Russia’s ability to supply China.

    Hindsight is wonderful. We all know the results of last year’s Grand National, but William Hills won’t let us change our betting slip.

    • January 27, 2022 10:50 am

      A picture’s worth a thousand words:

    • Gerry, England permalink
      January 27, 2022 11:27 am

      It was the EU that caused the Nord Stream 2 problem by changing the ownership requirements after Gazprom had started construction. The sort of low grade thing the EU does.

      • Ron permalink
        January 27, 2022 11:57 am

        The change wasn’t after starting it. The change came after the pipeline was finished and filled with natural gas. Or in other words, ten billion euros later.

    • It doesn't add up... permalink
      January 27, 2022 11:40 am

      Russia has halted all deliveries via Belarus and Poland on the Yamal line. For now some deliveries continue into the Ukraine. Nordstream has seen a couple of dips in volumes in recent days which may have been operational, contractual or tactical.

  8. It doesn't add up... permalink
    January 27, 2022 11:48 am

    Missing from the account are 3 cargoes from Russian Yamal LNG and 2 from Peru and one from Trinidad. The Vladimir Voronin is supposedly headed to Grain and due on 3rd February. One to watch.

    • It doesn't add up... permalink
      January 27, 2022 5:33 pm

      Even sooner is the Fedor Litke, due to arrive at Grain on 29th January. I recall there were a lot of attempts to hide the first cargoes of Russian LNG which were actually even excluded from the official trade statistics for some months and officially denied, despite the data showing the Christophe de Margerie in port, and the stock of LNG rising… That was at a time of cold winter weather around Christmas 2017 and danger of running out of gas. We’ve learned little since, it seems.

  9. January 27, 2022 12:18 pm

    So the windmills aren’t working are they, Boris? These environmental terrorists called ‘greenies’ are screwing the West based on lies. They are driven by fanciful anti-science rhetoric that man-made CO2, of 0.12% of total naturally occurring CO2, can change the climate. Meanwhile China & the rest of the world who are ignoring this garbage, are rubbing their hands together with glee.

    • Ben Vorlich permalink
      January 27, 2022 2:07 pm

      Well they are a bit better today, exceeding 40% at 07:00 after a period of indolence lasting several days. I use Gridwatch to see what kind of weather the UK is having before I get up and have a look at the local weather. Demand, and wind give a general view apart from the rain situation.

  10. Mikehig permalink
    January 27, 2022 12:20 pm

    Just spotted this report that Qatar’s LNG production is maxed out:
    https://gcaptain.com/qatar-is-totally-maxed-out-of-lng-gas/?subscriber=true&goal=0_f50174ef03-f2d15e9751-170410014&mc_cid=f2d15e9751&mc_eid=9275323244

    Thngs could get tricky very quickly…..

  11. Julian Flood permalink
    January 27, 2022 1:15 pm

    Phillip Bratby  says
    “There is no cure for stupid, otherwise we would be self-sufficient in gas and oil,”

    When a Minister for Energy and Climate change cannot understand that electricity once generated must be used immediately or be stored in some way, how can we be surprised that we’ve ended up here? Not stupid, a first class degree from Oxford – admittedly PPE, but still.

    JF
    Incidentally LNG is kept cold by allowing some of it to boil off in transit. If only we had billions of cubic metres of the stuff under Lancashire and Glasgow, we could save all those emissions.

    • Mikehig permalink
      January 27, 2022 1:50 pm

      I think you’ll find that LNG boil-off is used to help power the ships so there are no emissions of methane to worry about.

  12. David Waller permalink
    January 27, 2022 2:14 pm

    Can anybody tell me by how much our Co2 emissions would increase if the Co2 from all our imports were included, since we have outsourced a lot of manufacturing. I have long contended that to be an M P you only needed three requirements, one being to leave common sense at the gates of Westminster, this lot have done it with a vengeance.

    • It doesn't add up... permalink
      January 27, 2022 6:11 pm

      Data are only as far as 2018, available here:

      https://www.gov.uk/government/statistics/uks-carbon-footprint

      The accounting back credits emissions embedded in exports as well as charging for emissions in imports. The overall total was 703m tonnes CO2e compared with about 470m tonnes CO2 of recognised domestic emissions (remember we don’t count Drax woodchips!).

  13. Diogenese10 permalink
    January 27, 2022 3:38 pm

    Anyone know how many LNG tankers there are , as the world runs on just in time basis I can’t see there would be many spares .

    • It doesn't add up... permalink
      January 27, 2022 5:59 pm

      See this article: the fleet has been growing rapidly and was 665 vessels and 100m cubic metres in capacity late last year.

      https://splash247.com/global-merchant-fleet-tipped-to-have-more-lng-carriers-than-vlccs-by-as-early-as-2025/

      However, I also read that the vessels not fuelled by gas boiloff and older vessels may have to be retired come 2025 due to pollution regulation. I suspect that conversion may happen to some that are young enough, but that will put them in dry dock for months, and dry dock capacity is limited. The order book has slowed down, but may rebound if demand for LNG tonnage looks to be sustained.

      Meanwhile I’ve noticed that ships seem to be making quite speedy journeys – just 14 days from Corpus Christi to Milford Haven for instance, which is about 17 knots. That uses more fuel, but it does increase effective fleet capacity. Another incentive has been charter rates that have been as high as $300,000 a day. Saving a few days off the voyage time more than pays for the added fuel.

  14. January 27, 2022 7:58 pm

    US is able to export cheap gas as it has a glut due to fracking in the Permian Basin. The oil companies would probably flare the gas if they could, but are correctly made to put in infrastructure and sell it to LNG producers.Ironic that the lights are only staying on in Europe and the UK due to fracked gas.

  15. Jack Broughton permalink
    January 27, 2022 8:00 pm

    Only one country gains from the Russia – Ukraine fear-campaign: the USA. It sells loads of expensive LNG, hits Russia and controls the EU. As previous posts note, Russia has honoured its gas contracts: it is the spot market that is causing the problem and that is only a problem because of lack of gas storage, which allows derivatives traders to flourish. We are truly ruled by blockheads!

  16. Mikehig permalink
    January 27, 2022 11:12 pm

    Talking of LNG shipments, I stumbled across this item from Reuters:
    “MOSCOW, Jan 26 (Reuters) – A huge Russian gas vessel, designed to safeguard supplies to the Russian enclave of Kaliningrad, has returned to the Baltic Sea region, tracking data showed on Wednesday, amid tensions over Ukraine and concerns about gas supplies to Europe.
    The Refinitiv Eikon data showed the Marshal Vasilevskiy – a floating storage and regasification unit (FSRU) which can also act as a liquefied natural gas (LNG) vessel – visited the Belgian port Zeebrugge where it loaded 163,800 cubic meters of LNG on Jan. 20 and is now near Kaliningrad.
    The ship’s main role is to supply LNG to Kaliningrad, which is separated from Russia’s mainland and sandwiched between Poland and Lithuania. The ship ensures the enclave can receive gas even if there are disruptions to pipelines running through Lithuania.”

    Intriguing that this vessel should be moved at this time and at such priority that they bought LNG in Belgium rather than going to one of their own export hubs.
    Are they expecting supplies to Kaliningrad to be disrupted? What would be the circumstances?
    There are a lot of Russian forces in Belarus preparing for joint exercises next month in the west of the country, close to Poland and Lithuania…..

    • It doesn't add up... permalink
      January 28, 2022 3:17 am

      No particular surprise that they used Zeebrugge for transshipment. The Marshal Vasilevsky would not be of a high enough ice class to do the run to Sabetta: they use specialised ice breaker LNG carriers for that. When the ice gets too thick to use the Arctic route, they often transship for delivery to further flung destinations (Zeebrugge and Montoir are frequently used), allowing the icebreaker ship to get back to load the next cargo instead of being used on a long voyage via Suez and Malacca to China and back. The supply to Lithuania comes from a spur to the Yamal line via Belarus: there is volume being shipped on this segment, but it is down sharply. There is no volume going from Belarus to Poland, and the Russians have made it plain that the Yamal pipeline volumes are going to stay limited.

      • Mikehig permalink
        January 28, 2022 5:25 pm

        Thanks Idau. That explains the ship loading as it did.
        Reading my post, I think I must have been channelling Tom Clancy!

      • It doesn't add up... permalink
        January 28, 2022 7:18 pm

        I read that the Marshal Vasilevsky is ice class Arc 4, good for up to 0.8m ice, which might be encountered in the Baltic. It has in fact done a run from Sabetta to Dabhol, India, via the Arctic route – but not in winter conditions. The main Yamal LNG fleet are ice class Arc 7, good for up to 1.5m ice without an icebreaker assist. Even those ships have at times been ice bound this winter.

  17. cookers52 permalink
    January 28, 2022 6:28 am

    Government and Parliament have involved themselves in the Energy supply strategy of the country because voters asked them to. Net zero is what we voted for it was clear in all parties manifestos.

    Events as always have taken an unexpected turn, although perhaps not that unexpected. Boris is almost unnoticed on the world stage other than his small part as the village idiot.

    We are an island made of coal and gas but seem to be pressing the self destruct button. The government demolished all the power stations all hope is lost.

    • Stuart Brown permalink
      January 28, 2022 9:54 am

      “Government and Parliament have involved themselves in the Energy supply strategy of the country because voters asked them to. Net zero is what we voted for it was clear in all parties manifestos.”

      Your first sentence implies we had a choice. Your second reveals we didn’t.

  18. Matt Gregory permalink
    January 29, 2022 3:12 pm

    Russia is not going to invade, only if neocons in West provoke them enough (false flag). Even then they could destroy Ukraine’s military without crossing border. Europe has been sending gas to 404 Ukraine. Europe is below 40% gas storage. Austria is at 23%.

    • Duker permalink
      January 30, 2022 8:19 am

      Yes . Even the Ukraine President, no friend of Russia, has said the western countries war scare has got of hand. he should know. Just over 100 miles from Kiev to Russian border.

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