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Home » LNG spot prices surge over 40% amidst Israel-Hamas conflict

LNG spot prices surge over 40% amidst Israel-Hamas conflict

Liquefied Natural Gas (LNG) spot prices have soared by more than 40 percent since the start of the Israel-Hamas conflict on October 7, when Hamas attacked festival goers.

According to S&P Global Commodity Insights, spot Liquefied Natural Gas (LNG) prices increased to $18.345/MMBtu on October 16.

This increase of more than 40 percent since October 6 is ascribed to the Israel-Hamas conflict, which erupted on October 7, triggering geopolitical concerns and thousands of deaths.

The confrontation remains urgent, with the US urging caution to avoid further escalation. Natural gas prices in Europe are volatile due to concerns about sufficient supply for the impending winter.

The confrontation between Israel and Hamas and Chevron’s operating difficulties in Australia have heightened market concern. Chevron Corp, a US oil major, has shut down the Tamar natural gas field off Israel’s northern coast.

The Tamar field has a large reservoir and provides the majority of Israel’s energy for power generation.

A protracted Tamar stoppage might impede Israeli gas supplies to neighbouring countries, particularly Egypt, a major exporter to the European market.

Read also Gas to play a key role in Africa’s energy mix – NLNG

While the European Union (EU) is not projected to experience significant supply shortages this winter, the ongoing global disruption is expected to keep prices high, creating an opportunity for African LNG suppliers such as Nigeria.

Earlier, Philip Mshelbila, the Managing Director of Nigeria Liquefied Natural Gas (NLNG) Limited, told Ekperikpe Ekpo, Nigeria’s Minister of Gas, that the company’s most pressing concern at the moment is feed gas supply, a critical issue affecting both current operations and future expansion plans.

Trains 1–6 are now working at only approximately half of their potential capacity, according to Mshelbila, and this has been a continuing difficulty. The principal cause of this problem is crude oil theft, which has an impact on the supply of related gas.

The plant’s capacity is underutilised, not due to a lack of capability, but rather due to insufficient feed gas availability. He also said that the corporation intends to source the required gas from deep-water sources; however, addressing the extraction terms is a critical prerequisite for advancement.

The MD of NLNG further stated that the current Production Sharing Contracts (PSCs) governing deep-water exploration do not provide financially viable terms for Nigerian producers.

As a result, overcoming these obstacles is critical to achieving NLNG expansion goals and assuring a dependable and sustainable supply of feed gas for their operations.

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