Israel-Hamas Conflict Sparks Significant Increase in LNG Prices

The continuing Israel-Hamas conflict, which erupted on October 7 in response to a Hamas strike has resulted in a significant increase in liquefied natural gas (LNG) spot prices, prompting worry in global energy markets.
According to S&P Global Commodity Insights, spot LNG prices reached $18.345/MMBtu on October 16, representing a price rise of more than 40% from October 6.
The dispute, which has resulted in terrible deaths and geopolitical worries, remains a crucial subject, with the US urging prudence to prevent further escalation. Furthermore, natural gas prices in Europe are volatile, owing to concerns about winter supplies.
Further complicating matters, operational problems at Chevron in Australia have heightened market anxiety.
Chevron Corp, a major oil firm in the United States, has temporarily halted production at the Tamar natural gas project off Israel’s northern coast. This sector is critical to Israel’s energy source for power generation.
A protracted Tamar outage could have an impact on Israeli gas shipments to neighbouring nations, particularly Egypt, a vital gas exporter to Europe.
While the European Union (EU) is expected to manage any supply concerns this winter, the ongoing global gas disruption is likely to keep prices high, creating opportunities for African LNG producers such as Nigeria. Nigeria, on the other hand, suffers its own hurdles in the form of local feed gas supply issues.
Dr Philip Mshelbila, the Managing Director of Nigeria Liquefied Natural Gas (NLNG) Limited, has addressed his concerns to Nigeria’s Minister of Gas, Ekperikpe Ekpo. The biggest source of worry is a lack of feed gas, which affects both current operations and future growth plans.
Dr. Mshelbila stated that due to ongoing issues, NLNG’s Trains 1–6 are only functioning at half of their potential capacity.
Theft of crude oil has been recognised as the key factor affecting the availability of associated gas.
To address these issues, the company intends to source the necessary gas from deep-water sources, but extraction arrangements must be agreed upon before progress can be made.
The MD of NLNG further stated that the current Production Sharing Contracts (PSCs) governing deep-water development in Nigeria do not provide producers with commercially viable conditions.
As a result, addressing these difficulties is critical to meeting NLNG expansion targets and maintaining a consistent and long-term supply of feed gas for their operations.

Source: allnewsng.com

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