LNG sellers seek credit letters as gas price spike stretches credit limits
Sellers of liquefied natural gas (LNG) are asking for credit letters from companies they deal with to guarantee they can pay as the global spike in gas prices takes them beyond their credit limits, industry sources said. Defaults have been rare in LNG, which has typically relied on big players with deep pockets, but over the last two-to-three years, around 20-to-30 companies have entered the market, at least doubling the number of relatively small players. These companies were lured by a spike in demand, especially in Asia, spurred by relatively cheap gas prices and a global energy transition that saw countries such as China shift from coal to gas. Now credit limits are being breached because of a global price surge, as demand recovers following the COVID-19 crisis and supplies tighten, seven industry sources told Reuters. In Asia, the focus of LNG trade, spot LNG prices hit a record of $34.47 per million British thermal units (mmBtu) last week, up roughly 100% from a month ago and more than 500% from the same period last year. A typical 3.4 trillion British thermal units LNG cargo, is worth between $100 million and $120 million compared with less than $20 million in late February. Sellers of the super-chilled fuel as a result are seeking letters of credit when they sell cargoes to trading firms, and even to some end-users, to ensure the buyers’ banks have backed the purchases. The sources asked not to be named because they are not authorised to speak to the press. Banks issue letters of credit on behalf of buyers as a guarantee they will pay the seller a certain sum of money within a certain period. Open credit, which is how most LNG spot trades have been conducted, typically involves pre-approved loans between the bank and the borrower that the latter can use repeatedly up to a certain limit. In contrast to oil, LNG cargoes tend to be sold on open credit as buyers are typically large companies with assets. However, some buyers or traders are being strained in the current price environment, the sources said. They said credit limits vary from company to company and if they were covered by say up to $150 million in total, that would mean they could now only buy one cargo, rather than several. This year’s price spike is an extreme rally from the record lows of below $2 per mmBtu in May last year when lockdowns shrank consumption and some buyers declared force majeure or requested delays in deliveries of cargoes for which there was no demand, but they were contracted to buy. Sellers are wary of any future volatility, a source familiar with contract negotiations told Reuters, adding that companies were requesting letters of credit (LCs) to be embedded in master sales and purchase agreements for spot deals. “Previously, only those buyers who had low credit ratings were being asked for LCs, but now it’s being asked across the board except for maybe companies with an excellent credit rating,” the source said. One Singapore-based LNG trader said even bigger traders were being asked for letters of credit, which could curb the appetite to trade and exacerbate supply tightness. Reuters contacted six large trading houses for comment, but none had any immediate response.
Silicon, hydrogen to emerge as ‘New Oil’ for RIL
Reliance Industries Limited (RIL) has planned to transform its energy business with an over-arching strategy to offer decarbonisation solutions globally at a competitive price (similar to its existing energy portfolio) in a market potentially worth $5 trillion by 2030, Morgan Stanley said in a report. The strategy is to provide supporting infrastructure in areas of hydrogen, integrated solar PV and grid batteries – all areas with high entry barriers, technological advances and good returns. It plans to create four gigafactories with a $12 billion investment, offering the entire spectrum of renewable/distributed energy solutions, as it capitalises on India’s quartz and silicon resources. The focus on the hydrogen value chain offers significant opportunities to decarbonise energy operations, compliment energy storage with batteries and potentially export green ammonia, the report said. RIL’s approach is unique in that it is taking a leaf from European oil majors to become an enablers of electrons, with less focus on producing them, and like US majors it will focus on synergistic decarbonisation areas (with existing operations), such as carbon capture, hydrogen and even biofuels. The plan would make RIL the largest renewable infrastructure producer with the potential to become an alternative technology supplier to the globe, within the current geopolitical setup, similar to how RIL exports high-grade refinery fuels, the report said. In the last decade, RIL investments in technology drove $125 billion in value creation from scratch, and we see investment in green energy infrastructure as key to outperformance in the next decade. The success RIL has enjoyed from entry into offering telecom data in the past half a decade surprised the market. And we expect silicon and hydrogen to emerge as the next decade’s ‘New Oil’ for RIL, with potentially up to $60 billion in value creation if things fall into place by 2025, Morgan Stanley said. Although RIL is up 27 per cent YTD, it still trades at a discount to market and peer multiples, and we think no value is being attributed to the new energy business, the report said.
Gas price increase positive for ONGC, Reliance Industries: Fitch
The 62 per cent increase in natural gas prices by the Indian government will boost the profitability of upstream companies in the country and support their investment spending, Fitch Ratings said on Tuesday. The price for gas from fields that were assigned by the state to oil companies, mainly Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), increased to USD 2.90 per million British thermal units (mmBtu) for October 2021-March 2022, from USD 1.79 per mmBtu in the previous six months. “Higher gas prices will increase the input cost for key end-consumer sectors, to the extent the price hike is passed on,” Fitch said. Domestically produced gas is supplied on a priority basis to certain sectors, with 30 per cent of it being consumed by power producers, around 27 per cent by the fertiliser sector and 19 per cent by city gas distributors in FY21. The gas price increase will hit the fertiliser sector’s profitability by increasing working-capital requirements, Fitch said. Auto gas fuel’s price will remain competitive against liquid fuels, albeit with a reduced differential, notwithstanding the gas price increase. This is because liquid auto fuel prices have also been climbing in recent months, given the rise in crude oil prices. The cost of power generated by gas-based power plants will increase, which will further decrease their utilisation. “ONGC’s and OIL’s ratings and standalone credit profiles (SCP) remain unchanged as the price increase was largely in line with Fitch’s expectations, driven by the rise in global prices over July 2020-June 2021,” the rating agency said in a statement. However, sustained high gas prices will strengthen ONGC’s ‘bbb+’ SCP and will add buffer to OIL’s credit metrics, which will support its capex to expand capacity at subsidiary Numaligarh Refinery Ltd. The government also increased the price ceiling for gas produced from deepwater and other difficult fields to USD 6.13 per mmBtu from USD 3.62 per mmBtu. “Reliance Industries Ltd’s gas production from KG basin will benefit from the higher price ceiling, but the impact on RIL’s financial profile is minimal as gas makes a limited contribution to its revenue,” Fitch said. The rating agency estimated ONGC’s net leverage, measured by net debt/EBITDA, to improve to around 2.1x in the financial year ending March 2022 (FY22) from 2.7x in FY21 as upstream earnings recover and downstream earnings stay resilient. Natural gas’ share of consolidated revenues is in the mid-single digits for ONGC, given its integrated business model. It expects OIL’s FY22 leverage to be 1.9x. Natural gas accounted for about 13 per cent of OIL’s upstream revenue in FY21, Fitch said.
Oil Cos wary of avoiding UK-like situation as petrol, diesel prices hit new highs
Petroleum Secretary Tarun Kapoor said oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided. Even as petrol and diesel prices saw another price hike on Sunday to reach all-time highs in several parts of the nation, top government officials stressed that oil companies have not passed on the entire increase brought about by global oil and gas prices rising to three-year highs and have made sure that a UK-like situation of fuel pumps running dry does not arise anywhere in India. According to a price notification of state-owned fuel retailers, petrol saw the third straight hike in prices, rising 25 paise a litre, while diesel rose 30 paise. In Delhi, both fuels hit their highest ever level, with petrol at Rs 102.39 and diesel at Rs 90.77 per litre. In Mumbai, petrol was at Rs 108.43 and diesel Rs 98.48. Prices differ from state to state depending on the incidence of local taxes. Petroleum Secretary Tarun Kapoor said oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided. “We are watching the situation and trying to ensure the impact of global volatility is moderated to a large extent,” he said. The basket of crude oil India buys has jumped to a near three-year high of $76.71 per barrel. International prices of petrol, against which local rates are benchmarked, have risen from $85.10 per barrel to $87.11 in just one day while diesel has gone up from $85.95 a barrel to $87.27. “Some people are making a big deal out of the 62 per cent hike in natural gas prices. But if you look at the rates previously at $1.79 per million British thermal unit were abnormally low and way below cost. They have now gone up to $2.9. They still are less than the cost of production of $3.5 per mmBtu and are certainly lower than the $4.2 price that was prevalent in India a decade back,” a government official said. Naturally, the hike in natural gas price will warrant an increase in CNG price but the increase is again being moderated there too, he said adding internationally the price of LNG in the spot market last week soared to an unprecedented $35. “Compare to what is happening worldwide, we have managed the situation well,” the official said. “Some of the developed nations such as the UK have seen petrol pumps go dry but you won’t have heard of such a situation anywhere in India. Our oil companies are not just moderating retail prices but also ensuring uninterrupted supplies.” Officials said India believes the situation internationally is temporary and abnormal and things should stabilise over the next few days and weeks. The fifth hike in its rates in less than a week’s time has sent petrol prices above Rs 100 in most major cities of the country. Similarly, the eighth increase in prices in 10 days has shot up diesel rates above Rs 100 mark in several cities in Madhya Pradesh, Rajasthan, Odisha, Andhra Pradesh and Telangana. State-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) resumed daily price revisions on September 24 after international oil prices neared a three-year high.
Net oil importer India left with few options as international oil prices surge
As the world’s third-largest oil importer and consumer, India is running out of options as the relentless surge in international oil prices make it imperative to pass them on to consumers, officials said Monday. India imports 85 per cent of its crude oil needs and about half of its natural gas requirement. While the imported crude oil is turned into fuels such as petrol and diesel, gas is used as CNG in automobiles and fuel in factories. “International crude oil prices continue to remain high, providing no respite to major oil importers such as India. (International benchmark) Brent oil future was quoting over USD 79 per barrel today. A month back it was less than USD 72,” a top government official involved in the decision making said. This spurt has squeezed margins and forced passing on to the increase to consumers in form of a hike in petrol and diesel prices. “With international crude oil prices moving in both directions during July and August, no price increase was carried out by oil marketing companies (OMCs) from July 18 to September 23. Instead, a total decrease of Rs 0.65 a litre on petrol and Rs 1.25 per litre on diesel was carried out during that period. “However, with no respite from surging international prices, OMCs have started to increase the retail selling price of petrol and diesel with effect from September 28 and September 24 respectively,” the official said. While prices were unchanged on Monday, rates have gone up by Rs 2.15 paise per litre in the case of diesel since September 24. Petrol price has increased by Rs 1.25 per litre in one week. “Unless international prices relent, oil companies will have no option but to continue passing on the increase to consumers,” another official said. Expectations of a continued crude oil supply deficit along with soaring gas prices spurring power producers to switch from gas to oil have helped support the rally in international prices. The global oil demand outlook continues to remain positive and is expected to reach pre-pandemic levels by early next year. “On the supply side, OPEC+ alliance is expected to step up a planned increase in output to ease supply concerns after growing pressure from consumers such as the US and India to produce more,” the first official said, adding the cartel and its alliance members are meeting to discuss whether to go beyond the existing deal to boost production by 0.4 million barrels per day in November and December. The outcome of this meeting may decide the near-term trend for international crude oil prices, he said. Petroleum Secretary Tarun Kapoor last week told PTI that oil companies are taking their own decision on aligning retail rates with the cost but they are ensuring extreme volatility is avoided. “We are watching the situation and trying to ensure the impact of global volatility is moderated to a large extent,” he said. International prices of petrol, against which local rates are benchmarked, have risen from USD 85.10 per barrel to USD 87.11 in just one day, while diesel has gone up from USD 85.95 a barrel to USD 87.27. This sudden spike in international oil prices follows global output disruptions, but the entire increase in retail rates necessitated by such an increase is not being affected, another official said. “Just look at LPG rates. They have gone up from USD 665 per tonne to USD 797 in one month but oil companies haven’t passed on the increase warranted from that,” he said, adding state-owned companies were absorbing a lot of volatility. The increases, he said, have been “mild to moderate”. “Some people are making a big deal out of the 62 per cent hike in natural gas prices. But if you look at the rates previously at USD 1.79 per million British thermal units were abnormally low and way below cost. They have now gone up to USD 2.9. They still are less than the cost of production of USD 3.5 per mmBtu and are certainly lower than the USD 4.2 price that was prevalent in India a decade back,” the official said. Naturally, the hike in natural gas price will warrant an increase in CNG price but the increase is again being moderated there too, he said, adding internationally the price of LNG in the spot market last week soared to an unprecedented USD 35. “Compare to what is happening worldwide, we have managed the situation well,” the official said. “Some of the developed nations such as the UK have seen petrol pumps go dry but you won’t have heard of such a situation anywhere in India. Our oil companies are not just moderating retail prices but also ensuring uninterrupted supplies.” Officials said India believes the situation internationally is temporary and abnormal and things should stabilise over the next few days and weeks.
Rising fuel prices accelerate demand for CNG vehicles in India
Rising fuel prices have accelerated demand for CNG vehicles in the country. Accordingly, the availability of CNG in more cities has supported this trend. “Demand for CNG vehicles remains strong, benefiting from surging fuel prices and increased CNG penetration in newer cities,” said Motilal Oswal Financial Services (MOFSL). “Inventory in the system is 10-20 days.” According to MOFSL, the retail demand evolution has been a mixed bag since the lifting of the second lockdown from mid-June 2021. It pointed out that demand has bounced back quicker for ‘PVs, but 2Ws’ have seen slower recovery. Besides, ‘CVs’ are expected to see healthy recovery from October 2021, the outlook for tractors is cautious due to the very high base of last year. “Demand for ‘2Ws’ is recovering very slowly, primarily due to the higher impact of the second wave in the rural market as well as higher fuel prices.” “Moreover, with increasing noise around EVs, customers are holding back on their purchases. Inventory in the system stands at 45-50 days as OEMs hope for good recovery during the upcoming festive season.” Furthermore, the report cited that demand for PVs remains strong, but sales are hampered by supply chain constraints, leading to high waiting periods for some of the high-selling models. “Inquiry levels are healthy and OEMs have a strong order book.”
Torrent Gas begins gas supply for households and industries in Gorakhpur
Torrent Gas Ltd on Sunday said it has commenced supply of natural gas to domestic households and industries in Uttar Pradesh’s Gorakhpur town. The state’s Chief Minister Yogi Adityanath on Sunday inaugurated Phase 1 of the city gas distribution (CGD) network in Gorakhpur, the firm said in a statement. “As part of the event, the CM inaugurated the supply of piped natural gas (PNG) to the first set of 100 domestic connections and one industrial connection. “He also dedicated the city gate station (CGS) and eight CNG stations of Torrent Gas, taking the total number of Torrent’s operational CNG stations in Gorakhpur GA (geographical area) to 18,” it said. Torrent Gas, the CGD utility of the diversified Torrent Group with group revenues of Rs 21,000 crore, has been authorised by the Petroleum and Natural Gas Regulatory Board (PNGRB) to establish and operate the CGD network and provide compressed natural gas (CNG) and PNG in 15 districts across Uttar Pradesh, including Gorakhpur. Domestic PNG is reasonably priced and brings savings of up to 43 per cent as compared to LPG. It is a paradigm of convenience for households due to multiple advantages such as reliability of supply, no requirement of storage space, no need for advance bookings or fear of dry-outs. For industries, it is not only convenient and economical but also has a lower carbon footprint as compared to other fossil fuels, and is eco-friendly. Speaking on the occasion, Adityanath said, “Availability of PNG will bring great relief to the people of Gorakhpur in general and housewives in particular due to the convenience and significant savings it offers. Availability of natural gas is likely to attract more industries in Gorakhpur bringing in new opportunities and development in the region.” Jinal Mehta, director of Torrent Gas, said, “Torrent Gas with presence in 15 districts across Uttar Pradesh is committed to the overall development of the state and has planned an investment of Rs 3,300 crore by FY26. Out of this, almost Rs 1,800 crore will be spent in eastern Uttar Pradesh, including Gorakhpur.” Through this investment, Torrent intends to connect over 8.25 lakh residences in UP with PNG supply and set up over 225 CNG stations in UP over the coming years.
After oil, gas price may see surge upsetting CNG, PNG rates
After the crude oil surge, global gas prices are expected to soar this year, putting consumers in India at the risk of inflated CNG and PNG rates. As per an assessment of the gas market done by Kotak Institutional Equities (KIE), domestic gas price are expected to more than double to $6.6-7.6/million BTU in 1HFY23E from the current level of $3.2/million BTU available during 2HFY22. “We compute a steep increase in domestic gas price to US$6.6-7.6/mn BTU for 1HFY23E, driven by the recent steep increase in global gas prices and anticipated higher futures curve in the coming months,” KIE said in its report. Benchmark gas prices have increased further in September 2021- with Henry Hub gas price increasing to $5.1/mn BTU from $4.1/mn BTU in August ($2.6/mn BTU used in the calculation for 2HFY22 prices), and UK NBP jumping to 15.4 pounds/mn BTU from 10.9 pounds/mn BTU in August (5.9 pounds/mn BTU used in the calculation for 2HFY22 prices). Moreover, Alberta hub gas price also increased to $3.1/mn BTU from $2.8/mn BTU in August ($2/mn BTU used in the calculation for 2HFY22 prices). Asian spot LNG prices increased further to $22.8/mn BTU from $16.7/mn BTU in the previous month. Higher gas prices means higher cost of transportation and cooking fuel for consumers. While the CNG margins are steady in September, a price hike of Rs 5-7/kg is required to pass on gas cost. IGL had undertaken a price hike on August 30 to mitigate higher cost of incremental LNG that it had to use for its CNG segment given capping of domestic gas allocation at 110 per cent of CNG consumption in 2HFY21. “We note that IGL and MGL will be required to take price hikes of around Rs 5-7/kg to pass on the impact of higher domestic gas price in 2HFY22,” KIE said.
What’s behind the wild surges in global LNG prices and the risks ahead
In less than a year and a half, liquefied natural gas (LNG) prices have lurched from record lows to record highs, with the market first reeling from the impact of the pandemic and now unable to keep up with a global recovery in demand. Demand jumped on economic growth plus a cold northern hemisphere winter followed by a hot summer, while supplies have been stymied by production problems. Recent power curbs and outages across China due to coal shortages have only exacerbated competition between Asia and Europe in securing sources of energy. That’s led to LNG prices hitting $34 per million British thermal units this week compared with just under $2 mmBtu in May 2020, while European gas prices have catapulted 300% higher this year. HOW BAD IS THE SUPPLY-DEMAND MISMATCH? Gas inventories remain critically tight in Europe and Asia which together account for 94% of global LNG imports and over a third of global gas consumption. Most major LNG producers are operating at or close to full capacity and have allocated the vast majority of their shipments to specific customers, leaving little prospect of a short-term fix. According to the International Gas Union, only 8.9 million tonnes per annum (mtpa) of a total 139.1 mtpa of planned new liquefaction capacity is expected to come online in 2021. Some of that additional capacity has been delayed by COVID-19 movement restrictions that have stopped or dragged out construction and maintenance work at several key sites including in Indonesia and Russia over the past year. So far this year, 288.1 million tonnes of LNG has loaded for exports globally, just 7% growth over the same period last year, Refinitiv data shows. WHAT ARE THE RISKS AHEAD? Buyers may struggle to buy enough gas for restocking and use. Less wind in Europe lately has boosted gas usage by power stations there, while in China power is being rationed to industry and some residential users, triggering a jump in LNG imports. Current long-range forecasts call for a mild winter in much of Asia this year, but the market fears a repeat of the 2020/21 cold snap could lead to a buying binge similar to the one in January that fired up prices. “At the extreme, it would not be a surprise if some gas or LNG cargoes could even change hands in the $100/MMBtu range, or ~$580/bbl in oil-equivalent terms, based on observing how prices have spiked in the U.S. gas market, for example, over the past ten years,” Citi said in a note to clients last week. HOW DID WE GET HERE? Spot LNG fell to a record low of $1.85/mmBtu in May 2020, when coronavirus containment measures snuffed out power demand just as new supplies from major producers including Qatar, Australia and the United States flowed onto the market. LNG producers slashed production, reducing shipments through the 2020 summer which have had a lasting impact on global gas inventories. The 2020/21 winter freeze then caught many power providers short, sparking a surge in spot demand and tightening gas stockpiles further just as logistics constraints slowed delivery times. Those factors and high shipping rates sent LNG spot prices rocketing to a record $32.50 per mmBtu in mid-January, though prices returned below $10 by the end of the month. Prices have since bounced back. European buyers struggled to rebuild stocks, with a hot summer boosting air conditioner use just as high carbon prices forced power generators to cut coal use and burn more gas. Gas field maintenance in Norway and lower volumes from Russia also cut supplies. Higher purchases by Asia on growth in Chinese demand and stock rebuilding exacerbated Europe’s shortfall, resulting in Europe-bound shipments through August sliding 18% from the same period in 2020, Refinitiv data shows. That left Europe’s gas inventories at 50-60% full by late summer, compared to 80% in the same period last year. The current re-stocking wave is now fuelling Europe’s surge in gas prices. WILL SUPPLIES BE FORTHCOMING? Apart from COVID-19-related project delays, the global energy sector pivot away from fossil fuels towards greener energy supplies has slowed investment in LNG infrastructure. That has hindered the ability of producers to quickly deliver more supply to market, said Charif Souki, co-founder of U.S natural gas company Tellurian. “The world was kind of lulled to complacency because prices were low for five years so no one felt an urge to plan and everyone got very religious on environmental protection and it is wonderful – we should be – but we should look at what things actually work rather than simply what we hope for,” he added.
EXPLAINER-What’s behind the wild surges in global LNG prices and the risks ahead
In less than a year and a half, liquefied natural gas (LNG) prices have lurched from record lows to record highs, with the market first reeling from the impact of the pandemic and now unable to keep up with a global recovery in demand. Demand jumped on economic growth plus a cold northern hemisphere winter followed by a hot summer, while supplies have been stymied by production problems. Recent power curbs and outages across China due to coal shortages have only exacerbated competition between Asia and Europe in securing sources of energy. That’s led to LNG prices hitting $34 per million British thermal units this week compared with just under $2 mmBtu in May 2020, while European gas prices have catapulted 300% higher this year. HOW BAD IS THE SUPPLY-DEMAND MISMATCH? Gas inventories remain critically tight in Europe and Asia which together account for 94% of global LNG imports and over a third of global gas consumption. Most major LNG producers are operating at or close to full capacity and have allocated the vast majority of their shipments to specific customers, leaving little prospect of a short-term fix. According to the International Gas Union, only 8.9 million tonnes per annum (mtpa) of a total 139.1 mtpa of planned new liquefaction capacity is expected to come online in 2021. Some of that additional capacity has been delayed by COVID-19 movement restrictions that have stopped or dragged out construction and maintenance work at several key sites including in Indonesia and Russia over the past year. So far this year, 288.1 million tonnes of LNG has loaded for exports globally, just 7% growth over the same period last year, Refinitiv data shows. WHAT ARE THE RISKS AHEAD? Buyers may struggle to buy enough gas for restocking and use. Less wind in Europe lately has boosted gas usage by power stations there, while in China power is being rationed https://www.reuters.com/world/china/china-power-crunch-slams-factories-coal-lobby-warns-not-optimistic-supply-2021-09-30 to industry and some residential users, triggering a jump in LNG imports. Current long-range forecasts call for a mild winter in much of Asia this year, but the market fears a repeat of the 2020/21 cold snap could lead to a buying binge similar to the one in January that fired up prices. “At the extreme, it would not be a surprise if some gas or LNG cargoes could even change hands in the $100/MMBtu range, or ~$580/bbl in oil-equivalent terms, based on observing how prices have spiked in the U.S. gas market, for example, over the past ten years,” Citi said in a note to clients last week. HOW DID WE GET HERE? Spot LNG fell to a record low of $1.85/mmBtu in May 2020, when coronavirus containment measures snuffed out power demand just as new supplies from major producers including Qatar, Australia and the United States flowed onto the market. LNG producers slashed production, reducing shipments through the 2020 summer which have had a lasting impact on global gas inventories. The 2020/21 winter freeze then caught many power providers short, sparking a surge in spot demand and tightening gas stockpiles further just as logistics constraints slowed delivery times. Those factors and high shipping rates sent LNG spot prices rocketing to a record $32.50 per mmBtu in mid-January, though prices returned below $10 by the end of the month. Prices have since bounced back. European buyers struggled to rebuild stocks, with a hot summer boosting air conditioner use just as high carbon prices forced power generators to cut coal use and burn more gas. Gas field maintenance in Norway and lower volumes from Russia also cut supplies. Higher purchases by Asia on growth in Chinese demand and stock rebuilding exacerbated Europe’s shortfall, resulting in Europe-bound shipments through August sliding 18% from the same period in 2020, Refinitiv data shows. That left Europe’s gas inventories at 50-60% full by late summer, compared to 80% in the same period last year. The current re-stocking wave is now fuelling Europe’s surge in gas prices. WILL SUPPLIES BE FORTHCOMING? Apart from COVID-19-related project delays, the global energy sector pivot away from fossil fuels towards greener energy supplies has slowed investment in LNG infrastructure. That has hindered the ability of producers to quickly deliver more supply to market, said Charif Souki, co-founder of U.S natural gas company Tellurian. “The world was kind of lulled to complacency because prices were low for five years so no one felt an urge to plan and everyone got very religious on environmental protection and it is wonderful – we should be – but we should look at what things actually work rather than simply what we hope for,” he added.