European natural gas prices are again surging toward a record high 📈🚀
That's due in part to:
> Carbon futures hitting an all-time high as utilities turn to coal
> Seasonally low stockpiles, limited supply from Russia/Norway
> Robust Chinese LNG demand
> Uncertain wind output
EU benchmark carbon futures surged above 65 euros/ton for the first time ever as utilities seek coal supplies amid the global gas shortage
European coal futures for next-year delivery also surged to the highest since 2008 amid growing demand from the continent's utilities
US gas prices have surged to the highest level since 2014 amid winter supply fears
American LNG exports are poised to reach a record high this winter as new projects ramp up output, leaving less supply for the domestic market
Dutch TTF and UK NBP natural gas prices closed at record highs on Monday amid a global supply crunch
Both are now trading above the equivalent of $26/mmbtu (!)
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Orders for turbines for natural gas power plants are vastly outpacing supply, threatening the world’s ability to keep pace with rising electricity demand
🧵 Thread on how we got here and what it means for power-hungry nations
The crux of the issue is that the gas turbine market is dominated by three companies -- Siemens Energy, GE Vernova, Mitsubishi Heavy
Theyve been caught flat footed by an acceleration in orders over the last few years. And they aren’t able (or willing) to quickly boost output
So, what is a gas turbine?
Its a 500-ton machine that is just like the jet engine, but to produce electricity instead of flight
Natural gas is burned to spin blades at speeds higher than 3,000 rotations a minute to powers a connected generator
The US, France (once cornerstones of the nuclear industry) are struggling with delays and cost overruns
Russia and China dominate, but face security concerns in the west
That leaves an opportunity for South Korea, which has diligently been building its atomic industry
As much as $9 trillion of nuclear investment will be required in the next quarter century to triple nuclear capacity
According to a Bloomberg analysis of the more than 400 planned and proposed nuclear reactors, Korea is positioned to win business with as many as 43% of them
END OF AN ERA: Russia's oldest gas export route to Europe halted
For over five decades, Europe benefited from a steady flow of Russian gas via pipelines in Ukraine. That deal has now expired
While that won't trigger shortages in Europe, it does mark a historic shift
Thread🧵
In the midst of the Cold War, the first large-scale pipeline to export Russian gas via Ukraine was completed in 1967
The USSR wanted to trade/profit with the capitalist West, while also exerting soft power. Meanwhile, the West needed fuel to feed their growing industries
The first deal between the USSR and a Western Europe nation was with Austria's OMV in June 1968
This makes sense, given Austria's ties with the USSR and its neutral position during the Cold War. But the 23-year deal to buy Russian gas was the first of several dominos to fall
How Japan ignored climate critics and built a global natural gas empire
🇯🇵❤️🚢
Every six hours, somewhere in the world, an LNG shipment controlled by a Japanese company leaves a port. However, these tankers are only the tip of the iceberg
Japan began importing LNG in 1969 (see attached thread about that)
Over the last 50+ years, the Japanese government and its companies have worked together to unlock new supplies from Brunei and Malaysia to Indonesia and Russia