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How Russia’s Gas Rollback Is Confusing Global Markets

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Mr. Di Odoardo estimates that LNG flows from the United States to Europe have already reached two-thirds of the bilateral target for this year, and that it should therefore be “easy” to achieve it.

Washington has also relied on other countries, including Japan, to forgo some of their shipments, leading to a substantial drop in shipments to Asia from the United States, analysts said. Over time, however, such generosity can be a harder sell, especially if the war in Ukraine drags on indefinitely and markets tighten further.

“Under current conditions, I don’t think Japan has the leeway to commit to continued long-term LNG shipments,” said Michitaka Hattori, director of the Japan Institute for Russian Economic Studies and NIS.

The surest way to lower prices is to increase supply. High prices will encourage marginal increases in exports, but it usually takes more than two years to build new gas processing facilities like the terminal Germany wants to build. Of course, demand for liquefied natural gas, which grew 6% in 2021, will most likely continue to grow as China and other countries switch to gas from dirty coal.

“I think the winter gas market is going to remain very tight due to Asia’s shift from coal to gas,” said Marco Alverà, chief executive of Snam, a major Italian energy company.

Cheniere Energy is moving forward with a major expansion of its export facility in Corpus Christi, Texas. Qatar also says it is working on adding a huge amount of liquefied natural gas over the next five years.

Developers, however, will be wary whether the current boom in Europe could fade long before the expiration of new LNG projects, which are typically expected to operate for 20 years or more. And European leaders insist they still see gas as a temporary solution before renewable energy sources such as wind, solar and hydrogen take over.

“There’s a question mark there about how much new gas will be needed,” said Mr Henderson of the Oxford Institute.

Ben Doley and Makiko Inoue contributed reporting from Tokyo, and Melissa Eddy from Berlin.