Emmanuel OchayiThe Israel-Hamas conflict, which began on October 7 following a festival attack by Hamas militants, has led to a more than 40% surge in Liquefied Natural Gas (LNG) spot prices, S&P Global Commodity Insights report revealed on Monday, October 16.
S&P Global Commodity Insights reported that LNG prices reached $18.345/MMBtu.
This rise in LNG prices has not only raised alarms but also presented new opportunities and challenges on the global stage. The conflict, which has led to thousands of tragic losses, continues to be a matter of critical international concern, with the United States emphasizing the need for caution to prevent further escalation.
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In Europe, the increase in natural gas prices is causing volatility as fears of inadequate supply for the upcoming winter loom large.
The Israel-Hamas conflict and operational challenges faced by Chevron in Australia have contributed to market uncertainty. Chevron Corp, a U.S. oil giant, temporarily halted production at the Tamar natural gas field off Israel’s northern coast, a field that holds gas reserves and supplies most of Israel’s energy for power generation.
The implications of a prolonged shutdown at the Tamar field extend beyond Israel. It could disrupt gas exports to neighboring countries, including Egypt, a key gas exporter to the European market.
While the European Union (EU) is not expected to face severe supply issues this winter, the persistent global gas disruption is likely to sustain high prices, potentially offering an opportunity for African LNG exporters like Nigeria.
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However, Nigeria has its own set of challenges related to local feed gas supply. Dr. Philip Mshelbila, the Managing Director of Nigeria Liquefied Natural Gas (NLNG) Limited, recently raised concerns about the company’s feed gas supply.
He noted that Trains 1 to 6 are operating at only about half of their potential capacity due to ongoing challenges, primarily stemming from crude oil theft affecting the supply of associated gas.
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Addressing the issues surrounding feed gas supply is crucial for realizing NLNG expansion goals and ensuring a reliable and sustainable supply of feed gas for their operations. These challenges are not just a national concern but have implications for the global energy landscape, especially in the context of the Israel-Hamas conflict’s far-reaching impact on LNG prices.
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