Russia Threatens To Redirect LNG From Europe To Friendly Countries Like China

When you roll the dice on wars, unpleasant things usually happen.

Russia May Redirect LNG

Please note Russia weighs redirecting LNG exports from Europe to Asia-Pacific

Russia’s Deputy Prime Minister Alexander Novak said on Friday that he had discussed with domestic energy companies the ‌possibility of redirecting Russian supplies of liquefied natural gas (LNG) from Europe to other markets, Interfax news agency and Izvestia newspaper reported.
Earlier this week Russian President Vladimir Putin said that ⁠Russia could halt gas supplies to Europe right now amid a spike in energy prices triggered by the Iran crisis, pre-empting EU plans to stop Russian LNG imports by end-2026 and pipeline gas by September 30, 2027
Novak said that Russian companies were considering opportunities to divert shipments ‌to ⁠Asia-Pacific markets. Negotiations are already under way, he said, and in the near future supplies will be redirected from the European market to what he described ⁠as friendly countries.
“Our companies are considering opportunities, without waiting for further restrictions from Europe, to conclude new long-term ⁠contracts with our partners and redirect some of the gas from Europe to other ⁠countries, including India, Thailand, the Philippines and the People’s Republic of China”, Novak said.

Do It. Why Wait?

Europe threatens to wean itself off Russian natural gas, so why wait?

It’s Europe that wants other sources. So, as a business decision, let Europe find them.

Things like this happens when you roll the dice on war.

World’s LNG System Strains as Qatar Halt Leaves Little Backup Supply

gCaptain reports World’s LNG System Strains as Qatar Halt Leaves Little Backup Supply

Companies in the United States and Australia, two of the top global liquefied natural gas producers, have little spare capacity to offset lost supply after Qatar halted production and declared force majeure on shipments due to the conflict in the Middle East, according to Reuters calculations and industry analysts.
Qatar supplies around 20% of the world’s LNG but stopped production this week because it is unable to send tankers full of the super-chilled gas through the Strait of Hormuz. Iran has said it would fire on any vessel that attempts to sail through the strait.
The U.S. is the world’s largest LNG producer, but its plants are running near full tilt and most cargoes are locked into long-term contracts. New U.S. production that could come online soon is unlikely to exceed 2 billion cubic feet per day, far short of the 10 bcfd gap left by Qatar – equal to about 80 million tons per year, according to Reuters calculations.
“There is no massive capacity on the sidelines,” said Alex Munton, director of global gas and LNG at research firm Rapidan Energy Group.

Russia Benefits

Middle East War Threatens Global Flows

On March 2, Bloomberg reported European Gas Jumps 28% as Middle East War Threatens Global Flows

European natural gas surged after fighting across the Middle East raised fears of a major disruption to global energy supplies, with traders watching how long ship traffic through the Strait of Hormuz will remain halted.
Benchmark futures jumped as much as 28% — the biggest increase since August 2023 — after tankers largely stopped traversing the narrow waterway over the weekend. It’s a key shipping route for energy, carrying about a fifth of the world’s liquefied natural gas exports. Oil also rose sharply.

Things just got worse, much worse.

Europe’s Natural Gas Price Set for Largest Weekly Gain in Three Years

Today, Bloomberg reports Europe’s Gas Price Set for Largest Weekly Gain in Three Years

European natural gas posted its steepest weekly gain since the energy crisis four years ago, as the war in the Middle East continues to cloud the outlook for global flows.
Benchmark futures rallied 67% for the week as volatility also jumped. Disruptions to energy supplies have sparked fears over intense competition for fuel and stronger inflationary pressures, particularly in Europe.
Earlier, Qatar’s energy minister told the Financial Times that even if the conflict ended immediately, it would take the country “weeks to months” to return to a normal cycle of deliveries. The world’s largest liquefied natural gas plant at Ras Laffan shut earlier this week after an Iranian drone attack.
Europe’s gas market is particularly vulnerable as it’s emerging from winter with storage tanks depleted. That means it will have to buy more LNG cargoes this summer to refill them, vying with buyers in Asia for a limited pool of supplies if Middle Eastern flows can’t reach global markets.
“If you want an extra ship of US gas in Berlin, you have to bid high enough to divert it away from Tokyo,” Bernstein analysts including Irene Himona wrote in a note. Several tankers have already diverted toward Asia in recent days.

Demand is Global

Add Russia’s statements to the price mix.

US natural gas futures are up 6 percent today. We have all the gas we need, sort of. Global demand will push up US prices too.

And if US producers can make money selling LNG at higher prices, they will.

Finally, US data center power demand is surging, with most of the power coming from natural gas.

What’s the Off Ramp?

By now, every nation has to be looking for an off ramp. But I fail to see how one is remotely possible given Trump’s demand for “unconditional surrender”.

For discussion, please see Irony of the Day: Trump Demands ‘Unconditional Surrender’ by Iran Without Declaring War

Unconditional surrender will take boots on the ground.