WASHINGTON (Pakistan Point News / Sputnik - 16th February, 2022) The Ukrainian crisis will put upwards pressure on the LNG market in the short term until additional liquefaction capacity becomes available, former Commissioner of the US Federal Energy Regulatory Commission, Branko Terzic, told Sputnik.
"The first impact has been that of increasing spot and future prices for crude oil and natural gas," Terzic said about the Ukraine crisis. "The secondary impact will be on plans in Western Europe, and especially Germany, for any future LNG construction and on future natural gas storage policies in Europe."
Terzic, currently the Managing Director of Berkeley Research Group, said the German government is already considering legislation requiring higher levels of natural gas storage in the country than might otherwise be justified by economic factors alone. Terzic believes Germany may also decide to commit to the construction of new LNG facilities to substitute for existing natural gas commodities purchases and transmission capacity from existing pipelines from Russia.
"In the short run this will put upwards pressure on LNG until additional liquefaction capacity comes on line," he said.
The former US official added that reactions are already underway given Russia is the major natural gas supplier to Europe.
"The global energy markets have already reacted by increasing the prices of crude oil and natural gas globally," Terzic said. "Europe has increased LNG imports and has had to outbid Asian buyers for the limited LNG supply. There are far fewer LNG tankers than crude oil tankers so the international trade is more limited in LNG than in crude oil."
The import of additional LNG into Europe also requires expensive new gasification facilities in place at the entry ports, he added.
"These can be fixed on land or floating but in either case must be on sight at the port before the LNG can be delivered, re-gasified and blended into a national pipeline system," the former US regulatory official said.
In the past few months, the US and its allies have accused Russia of a troop build-up near the Ukrainian border in alleged preparation for an invasion. Moscow has denied these accusations, repeatedly stating that it is not threatening anyone and at the same time expressing strong concerns over NATO's military activity near the Russian borders, which it deems a threat to its national security. Moscow has also said Russia has the right to move troops within its own national national territory.
