Why are natural gas prices going up again in Europe?

Gas prices in Europe surged to a two-month high on fears over possible strikes at a liquefied petroleum plant natural gas (LNG) in Australia. The Offshore Alliance trade union has issued a warning of a potential strike at Australia's North West Shelf (liquefied natural gas) plant, which is due to start on September 2 if safety and wage negotiations remain unresolved.

Double-digit increases in gas prices!

Bloomberg reported on Monday about a 10% increase in reference gas prices for the European Union and the United Kingdom. While gas prices rose after Russia entered Ukraine and then fell.

Concerns relate to the role of the North West Shelf facility in delivering LNG around the world because Australia is a leading supplier. In addition to this facility, the Chevron-operated Gorgon and Wheatstone offshore LNG plants are undergoing a strike vote, the results of which are expected on Thursday. These three plants account for around 10% of the world's LNG supplies, so the effects of these actions could severely disrupt gas supplies and prices around the world.

How can strikes affect global gas prices?

Ben MCWilliams, a contributor to the Bruegel think tank, warned that these strikes could have an impact on global LNG prices. Research firm Cornwall Insight predicts uncertainty surrounding gas supplies from Australia could lead to significantly higher gas prices and contribute to a significant increase in Ofgem's cap until January. Price cap expected to increase from £1925,71 in Q4 2023 to £2082,56 for a typical annual household bill in Q2024 XNUMX.

Australia sells gas mainly in Asia

In response to the reduction of natural gas supplies by Russia during the conflict in Ukraine, countries have been looking for alternative energy sources, with LNG being the main choice. Australia, along with Qatar and the United States, is the world's main LNG exporter. In 2022, Australian producers sold 112,3 bcm of liquefied gas abroad, only Qatar exported more – 3 bcm. The USA sold 114 billion m3.

Australia sells its gas mainly on the Asian market – to Japan, China, South Korea. and Taiwan. The USA is the main supplier of LNG to the European market. In 2022, imports of American liquefied gas to Europe reached 71,1 bcm. Therefore, it seems that the current increase in gas prices on the London Stock Exchange may be short-lived, taking into account the large gas reserves in warehouses in Europe and the directions of supplies.

According to data Gas Infrastructure Europe EU warehouses are already about 91 percent full.