A jam in the Suez Canal due to a grounded container ship will have an impact on the global gas market, primarily the European one. First of all, it blocks the route of LNG supplies to Europe from Qatar, the disposal of which can compensate for supplies from Russia, Norway, and the United States, the Rystad Energy consulting company said in a commentary.
Almost all LNG flows to Europe from Qatar (the largest LNG producer in the world) go through the Suez Canal. The canal is the main route for LNG cargoes heading from the Middle East to Europe and for some cargoes from the Mediterranean Sea to Asia. In 2020, around 260 LNG shipments were sent from Qatar to Europe via the Suez Canal (approximately five vessels per week).
Rystad counted five LNG tankers expected to arrive at European terminals in the first week of April and which stuck due to traffic jam (in the Gulf of Suez and the Arabian Sea). At the same time, even after the canal is released, it will take time for it to return to normal operation, since a large queue of ships waiting to pass has already accumulated around it.
As spring comes and the temperature rises, the demand for gas decreases, but the blockade is inevitable will support gas prices in Europe (primarily “intraday” and “day ahead” spot prices, and to a lesser extent – futures quotes).
Russian pipeline supplies are below maximum throughput, therefore Gazprom supplies can help provide some flexibility, analysts say. Norway also benefits, but its supplies are already close to maximum.
The route of the LNG consignment from Qatar to north-west Europe, according to Rystad, takes about 17 days (including 9 days from Suez to Great Britain), and the journey around Africa takes more than 30 days. It takes less time for LNG to travel from the US to Europe than it takes for Qatari gas to bypass Africa, and Rystad experts are wondering if the US will try to capitalize on the Suez crisis.