Both European and UK gas markets retreated somewhat following Nyhamna’s return last Friday however, markets have opened higher this week on renewed risks regarding LNG supply, pulling prices close to the highs of 2024 once again. On Tuesday, Chevron suspended production at its Wheatstone gas facility in Australia to complete repairs to the platform’s fuel gas system. Wheatstone’s top customers in 2024, based on LSEG’s supply data were Japan and South Korea, followed by China and Taiwan. Severe heatwaves across India, Bangladesh, south-east Asia and south China have also boosted gas consumption, pulling more LNG away from Europe. Whilst Europe has entered summer with gas inventories 72% full and slow economic recovery suggests that demand for gas is likely to remain muted, the recent disruptions have raised questions over how fast and expensive it will be to source gas in case consumption picks up next winter. Europe will need to compete for cargoes with other parts of the world, whilst possible disruptions on the remaining gas flowing through Russian pipelines continue to fuel additional risk premiums. A Bloomberg report earlier this week stated European officials are in talks to keep gas flowing through a key Russia-Ukraine pipeline, as they race to prevent Moscow’s war further damaging the continent’s energy supplies. In other news Uniper on Wednesday said it had decided to terminate its dormant Russian gas supply contracts, officially ending its long-term gas supply relationship with Gazprom.
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