Summary:
- European gas prices are surging due to the threat of strikes in Australia's LNG export facilities.
- Europe's gas supply has become more dependent on Lukafide natural gas after losing a significant portion of Russian pipeline gas.
- Workers at Woodside's Northwest Shelf LNG export plant and other Australian facilities are considering strikes that could impact global LNG supply.
- The strikes, if they occur, may lead to competition between Europe and Asia for available LNG supply, potentially causing price increases.
Just how bad is this getting? What's at stake here? You know, I think one thing to remember is that Europe is on edge in this gas market. Especially since last year's war, they've lost a lot of the Russian pipeline gas supply. They depend a lot more on Lukafide natural gas. And so these European gas traders, they look at what's happening in Australia. They're workers at Woodside's Northwest Shelf LNG export plant, one of the biggest in Asia, as well as three other export facilities in Australia that are threatening to strike. And the Northwest Shell strikes could begin as soon as September 2. But, you know, the view in Europe is very much this anxiety, this fear that there could be shortages, that they won't get the LNG that they need.
Whereas here where I sit in Singapore, folks are still pretty calm about the situation. You know, these strikes aren't happening yet. There is still time for there to be some sort of agreement with the operators. And at the same time, the strikes will have to go on for a number of days or weeks before it actually hits LNG exports materially. But in a worst case scenario, if these strikes do happen, if they do hit the LNG plants, that is 10 percent of global LNG supply. And that will put Europe directly in competition with Asia for the spare LNG in the market that could lead to, you know, prices rising, bidding wars for shipments. But that, of course, is an absolute worst case scenario.
We're not there yet. But the market, especially when it first opened, does appear to be pricing in some of those scenarios.