As Europe is still in major supply constraints, huge cargo ships carrying liquid fuel from China have changed their course and are heading to the UK.
Despite the fact that ships have been drawn away from other parts of the world by the Continent’s high energy prices and energy crisis, new arrivals are bringing down prices.
Last week, the UK’s gas price soared to an all-time high of 470p per unit. This was up from 50p in April. However, it has fallen to below 270p.
James Huckstepp is the managing analyst at S&P Global Platts. He said that tankers are moving towards British shores as a way to “critically temper even more extreme prices” and reduce demand destruction in Europe.
He stated that cargoes that were originally intended for Asia are now being diverted to the UK. This is especially true for cargoes that originate in the US. The journey to Europe takes much less time than it does to Asia.
According to Bloomberg, the number of US tankers headed for European ports increased by one-third last weekend. Twenty vessels carrying American gas were heading for Europe, while 14 others are heading in the general direction.
There are high hopes that new supplies will ease the energy crisis. This will also help lower gas prices. This will provide some relief for UK energy executives, who met with Downing Street officials this Wednesday to discuss the crunch crisis.
Stephen Fitzpatrick (the boss of Ovo Energy, Britain’s second-largest supplier) warned that bills would almost certainly double to £2,000 per household.
The Government may facilitate a deal where the industry would have access to a £20bn account, which they could then repay at a rate of £2bn per year over 10 years.
Nathan Piper, head for oil and gas research at Investec said that European and UK prices have risen above Asian liquefied petroleum gas (LNG), attracting more customers away from China.
These additional supplies will offer some relief ahead of the looming winter shortages. S&P Global Platts was informed earlier this month by a Singaporean trader that they don’t know “how sustainable these diversions towards the Atlantic will be”.
Low levels of gas storage, tight supplies to Russia, and higher energy costs in Europe have all contributed to this year’s high energy prices. This is partly due to weak winds speeds, as well as low energy output from clean energy sources. Since August, 26 retail energy companies went bankrupt.
Most of the country’s gas comes via pipes that connect to the North Sea, Norway, and continental Europe. However, it gets around 20pc through ships on the global market in normal times.
Russia was accused of withholding additional pipeline gas supplies to Europe in recent months in an effort to press Germany into opening its Nord Stream 2 pipeline.
This comes as new data shows that gas shipments from Russia to the UK have increased in recent years.
According to data from S&P Global Platts Analytics, Russia had shipped 29 LNG shipments to the UK in 2021. This is a significant increase over the 22 shipments that were sent a year ago. This is the second-highest annual figure in the UK since 2017 when the first Russian LNG shipments were made.
The North Sea industry advocates argue that Britain could increase its energy security by allowing more domestic oil and natural gas drilling. Nearly 10 North Sea projects with licenses are scheduled to be available for development approval and final investment decisions next year. However, they are likely to face opposition from climate activists.
Shell’s earlier this month decided to withdraw from the Cambo field development has given support to protestors. Siccar Point Energy was later made the decision to halt the project.
Friends of the Earth used analysis by Uplift to determine that 30 UK-licensed offshore oil and gas projects were in line for approval by 2025.
The Government stated that it supports domestic production because oil and gas still meet about 75% of the total UK’s energy requirements. This fuels most boilers and cars, and nearly 40% of the UK power supply.
It has also established a “climate compatibility checklist” that all new oil and gas projects must pass in order to be granted a license. North Sea drilling is supported by those who believe it reduces emissions than importing gas from other parts of the globe.