Psaki said at a daily press briefing:
- We're in discussion with major natural gas producers around the globe to understand their capacity and willingness to temporarily surge natural gas output and to allocate these volumes to European buyers
- We're also engaging with major buyers and suppliers of LNG to ensure flexibility in existing contracts and storage is managed and enables diversion to Europe
An Algerian government official, who spoke on condition of anonymity, told S&P Global Platts that Algeria has spare production and pipeline capacity available for additional gas supplies to Europe, if called upon.
The official said:
- The extra supplies could be sent as LNG or via Algeria's direct pipelines to Spain and Italy, and would not require the reopening of the pipeline via Morocco
Concerns over a possible Russian invasion of Ukraine, a critical gas and oil transit route, have roiled energy markets in recent weeks, with crude futures approaching $90/b.
Russian gas transport through Ukraine has been in decline in recent years and collapsed at the start of 2022.
Out of the 109.9 million cu m/d Russia could potentially deliver via its EU transport accord, net Ukrainian exit flows are averaging 45.10 million cu m/d this year to Jan. 22.
Shifting LNG demand
A senior Biden administration official said Jan. 25 the supply efforts were aimed at bridging Europe's several weeks' worth of existing natural gas storage and the warmer spring months.
The White House expects that to look like «smaller volumes from a multitude of sources.»
The Biden administration official said during a background briefing:
- At these prices, you can imagine, after several months of historic prices in the gas market in Asia and in Europe, that a lot of capacity is constrained and is running at flat-out max capacity
The spread is often used as a sign of arbitrage potential between the Atlantic and Pacific basins.
While the interbasin spread has remained negative so far in January, it has strengthened in recent days.
The spread for April traded at minus 80 cents/MMBtu before London close on Jan. 24.
Currently, with the narrow spread between Asian and European LNG prices and with cold weather predictions in Asia, the market sees traders redirecting once again their ships but now on the opposite side from west to east.