More than 35 ships carrying liquefied natural gas (LNG) circling off the coasts of Spain are reportedly unable to secure slots to unload their cargo which has prompted grid operators to warn they may have to suspend loading, according to a Reuters report.
As Europe struggles with an energy crisis due to Vladimir Putin-led Russia’s progressive reduction of gas flow, the region is increasingly looking towards alternative sources that include LNG. However, the plants that convert the fuel back to gas are operating at the maximum limit, reported Reuters.
Read Also: Best Investment Apps
If the backlog is not cleared at the earliest, those ships may begin looking for alternative ports outside Europe to unload their cargo, the report said.
The price of an LNG cargo delivered in late November or early December is close to $2/mmBtu higher than current prices, reported Reuters. The Global X MLP & Energy Infrastructure ETF MLPX has gained over 10% since the beginning of the year while the Vanguard Energy Index Fund ETF VDE is up over 42% in the same period.
Re-gasification Terminals: This week, Spain is offering only six slots at its re-gasification terminals for cargoes, the report said citing an industry source. This is less than a fifth of the number of vessels lining up on its coasts.
Expert Take: Alex Froley, LNG analyst at data intelligence firm ICIS believes one reason for the congestion is that prices are estimated to rise as winter approaches and demand for heating demand, according to Reuters. Some ships are waiting to sell their cargoes at a higher price in order to offset the extra shipping costs incurred by sitting offshore, he said.
Read Next: Why Europe Can’t Use Its Largest Gas Field To Dodge Putin’s Supply Cuts
Image and article originally from www.benzinga.com. Read the original article here.