The tanker Maria Energy, left, loaded with liquefied natural gas, is moored at the floating terminal Hoegh Esperanza, in Wilhelmshaven, Germany, January 3, 2023.
Tankers carrying liquefied natural gas—which is supercooled to travel by ship instead of pipeline—routinely pass through the Red Sea, and several shipments to Italy already have been canceled. Security concerns have led shipping and some energy companies to reroute vessels around the southern tip of Africa instead of through the Suez Canal at the northern end of the Red Sea. That is lengthening the journey to Europe from suppliers in the Middle East, like Qatar, by a week or more and raising costs.
Last year, 12.9 percent of Europe’s LNG went through the Red Sea from suppliers in the Middle East, mainly Qatar. That means “an extended shut-in of the Red Sea route from the Middle East poses a supply risk to Europe,” said Kaushal Ramesh, vice president at Rystad Energy.So far, there’s been little to no impact on natural gas prices.
That means “the price impact will be delayed until Europe’s gas storage has been drawn down sufficiently,” Rystad’s Ramesh said. “There is always a ‘but,’” Tagliapietra said. “The risk is an escalation that affects the Strait of Hormuz.”US gas exports rose sharply after Russia invaded Ukraine in February 2022, and the Biden administration has celebrated deliveries to Europe and Asia as a key geopolitical weapon against Russian President Vladimir Putin.The pause would allow officials to study the impact of LNG projects on climate change, the U.S economy and national security, Energy Secretary Jennifer Granholm said.