Natural gas buyers in Asia and Europe are seeking long-term contracts to secure supplies as a hedge against fluctuating global prices, according to industry officials, reversing a decade-long pattern of rising spot purchases.
Fears of Russian gas interruptions and low supplies prompted Europe to import record volumes of spot liquefied natural gas (LNG), driving prices to all-time highs early this year and causing global energy security concerns.
Years of poor investment have resulted in a scarcity of new supplies, while Russian supplies are in jeopardy, just as more countries have moved from coal to gas to fulfil climate commitments in recent years while LNG costs were low.
On the sidelines of the World Gas Conference, Peder Bjorland, vice president natural gas marketing and trading at Equinor ASA, told Reuters, ‘We see a larger demand currently than we did two years ago, obviously, so more interest for longer term contracts, energy security.’
He went on to say that European pipeline and LNG purchasers are looking for supply over the next five to ten years, whilst Asian markets want longer-term contracts of 15 to 20 years.
The length of LNG contracts is a sticking point in Qatar’s talks with Germany about long-term deliveries. continue reading
According to Anne Mai Hatlem, vice president of LNG at Equinor, European buyers may use middlemen to bridge the gap.
‘In Europe, we’re seeing more corporations sign longer-term contracts, which could be an indication of realism about how quickly we can phase out gas from the market,’ she added.
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