Liquefied Natural Gas spot prices have soared by more than 40% since the start of the Israel-Hamas conflict on October 7, when Hamas attacked festivalgoers.
According to S&P Global Commodity Insights, spot Liquefied Natural Gas prices increased to $18.345/MMBtu on October 16.
The Israel-Hamas confrontation, which intensified on October 7 and resulted in geopolitical concerns and the tragic loss of thousands of lives, is to blame for this increase of more than 40% from October 6.
Natural gas prices are fluctuating throughout Europe as a result of concerns about a sufficient supply for the approaching winter.
Market instability has been made worse by the war between Israel and Hamas and Chevron’s operational issues in Australia. The Tamar natural gas field off the northern coast of Israel has had production stopped by US oil giant Chevron Corp.
Israel gets the majority of its energy for electricity generation from the Tamar field, which has a sizable gas reserve.
Israel’s gas supplies to its neighbours, especially Egypt, a major gas exporter to Europe, could be affected by a protracted Tamar outage.
While it is not projected that the European Union will experience significant supply problems this winter, the ongoing worldwide gas disruption is anticipated to keep prices high, offering a possible opportunity for African LNG suppliers like Nigeria.
However, Nigeria is struggling with issues related to its own domestic feed gas supplies.
Recall that the Managing Director of Nigeria Liquefied Natural Gas Limited, Dr Philip Mshelbila, recently informed Nigeria’s Minister for Gas, Ekperikpe Ekpo, that the company’s current top concern is feed gas supply, a crucial issue affecting both present operations and future expansion plans.
Dr. Mshelbila stated that Trains 1 to 6 are now running at only about half of their potential capacity, and this has been a persistent issue. The main cause of this problem is crude oil theft, which affects the availability of related gas.
The lack of feed gas availability rather than a lack of capability is the reason why the plant’s capacity is not being used to its full potential. He added that the business intends to purchase the required gas from deep-water reserves; however, addressing the terms for extraction is a vital prerequisite for progress.
The MD of NLNG further emphasized that Nigerian producers do not currently have access to commercially feasible terms under the existing Production Sharing Contracts governing deep-water exploration.
Therefore, overcoming these obstacles is essential for NLNG to achieve its expansion ambitions and provide a consistent and long-term supply of feed gas for its operations.