European gas price slump yet to find a floor as inventories burst
The gas surplus will harden as there will be more LNG every year and lots of buyers have massively overcommitted counting on an Asian market that will be crazy forever. All those new volumes will be in search of a home and if they don’t find one they will use the one dump that works – North-Western Europe. That’s a problem for LNG – but not an existential one as the next upturn will come. A couple of Asian madhouse years will quickly make the losses back. LNG is flexible. Its an existential problem for Russia though as the majority of their exports are still pipelined gas. Export ventures such as Yamal to NS1 still drag a lot of immobilized cash along that needs to be earned back. Under current conditions, this will be impossible. What if conditions remain this way for 5 years and when the Asian bumper comes on again, they are stuck on lackluster Europe. New markets don’t spring up overnight when you are sleeping. You need to be pro-active for that. Not one of the best qualities of the gas players. They would rather sleep and die than spend some development money.
A protracted decline in European gas prices, which has hurt some energy firms but may prove a boon to buyers, has yet to find a floor as low summer demand could boost gas storage tanks close to chock-full amid soaring global supply.
