From the AFR:
No matter how the Ukrainian crisis pans out, Europe’s efforts to pare back its reliance on Russian gas have been given fresh impetus.
LNG suppliers, even those in far-flung Australia, look set to benefit as a result, at least in a few years’ time.
Europe’s anxiety at being held hostage to Russian gas was evident from a recent column penned in the Financial Times by Polish Prime Minister Donald Tusk, who urged the EU to look not just to US shale gas, but to Australian LNG for gas supplies.
By virtue of sheer distance alone, anything more than the odd cargo of Australian LNG reaching Europe is distinctly unlikely, however.
…But drawing LNG to Europe from the host of new export terminals under development in North America does appear realistic. And as that would reduce the impact from cheap US shale gas in the Asian LNG market, then it would be to the advantage of projects in this part of the world.
I don’t buy it. Europe is not going to pay more than Asia for LNG. It currently pays around $10mmbtu for Russian gas and would have to pay more like $18-19. Fat chance.
Even if they do, diverted supply from US to Europe means Russia and Qatar sell more to Asia. It’s an evolving global market with sufficient global dispersion to prevent regional price spikes in the future.
Europe is stuck with Russia and the US is using it as an excuse to rush LNG to the highest bidder, sensibly enough.
