The European Union’s desire to reject Russian gas, the energy crisis and other reasons have led to an increase in global LNG prices. For example, prices for liquefied gas (LNG), the main type of gas with which Europeans are trying to replace piped gas from Russia, have increased by 267% over the year. 

The growth is enormous, but this is not the limit, experts say. The fact is that LNG production, which is in the plans of many oil and gas companies, needs time to increase. While gas producers will increase production, LNG prices today will continue to grow.

Europe has suddenly become the main buyer of LNG, even if not yet regarding volumes, but regarding readiness to pay any price for it. It is not surprising that LNG prices today in Europe this year are breaking one record after another. From August 12 to 19, the average spot price of a million British thermal units, for example, reached $57. 

Global LNG prices today — what is going on?

As for Asia, the largest LNG importer by volume, it will import 20.59 million tons in August, according to forecasts. On average, Asian countries bought an average of 21.34 million tons a month in the first eight months of this year. That’s less, Reuters notes, than in the first eight months of 2021, when Asia received an average of 23.03 million tons of LNG per month.

Europe’s gas problems would have been less acute had it not been for the predilection of many European countries, and, above all, Germany for short-term contracts, and the predilection of major exporters, including, incidentally, America, for long-term contracts. Negotiations to supply Qatari LNG to Germany broke down because of this.

LNG remains the only reasonable alternative to Russian pipeline gas. It takes less time to build LNG infrastructure and especially floating LNG platforms than to build gas pipelines. By the way, Germany has followed this path and is now building floating LNG platforms. The first two of them are to start working this winter.

Europe will not be able to solve the gas shortage problem in the next two-three years if it does everything planned and completely abandons Russian gas. This will worsen the gas supply situation while demand increases. Many oil and gas companies are planning to increase their liquefied gas production. But this will take a long time. So LNG prices will have no choice but to keep growing.

Earlier we reported that the price of gold per ounce is staying close to $1,760.