According to the recently published World LNG Report by the International Gas Union (IGU), the prices of liquefied natural gas (LNG) have retreated from the historic highs witnessed during Russia’s invasion of Ukraine. However, the report emphasizes that the possibility of a return to the market conditions experienced in 2022 remains considerably high.
The IGU highlights Europe’s continued heavy reliance on the spot market for securing LNG supplies. In 2022, approximately 70% of the continent’s imports were sourced through spot buying, consequently amplifying the volatility of gas prices in Europe.
Europe’s ability to withstand the initial winter of the Ukraine conflict was facilitated by purchasing LNG to compensate for reduced Russian flows. In fact, the continent imported 66% more LNG in 2022 compared to the previous year.
While spot LNG prices reached an all-time peak of $70.50 per million British thermal units (mmBtu) in 2022, they have since plummeted by nearly 83%.
IGU President Li Yalan cautions that although prices have eased in 2023, the market remains imbalanced, generating significant risk and uncertainty. She asserts that the crisis is not yet fully resolved.
The report also reveals that global LNG trade achieved a new record in 2022, growing by 6.8% to reach 401.5 million tonnes (MT). This growth was primarily driven by a surge in European demand.
Australia maintained its position as the leading exporter in 2022, followed by the United States. Qatar and Russia retained their status as the third and fourth largest exporters, respectively, as stated by the IGU.
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