The LNG games: Changing market dynamics make for intriguing World Cup fixtures

An alternative view of the 2022 FIFA World Cup in Qatar would cast the competition as the world's first LNG games.

The competition, hosted by Qatar – whose wealth is tied to the super-cool fuel – pitches some of the world's biggest LNG buyers like Japan and South Korea against export heavyweights Australia and the US.

Will we see the host nation regain its title as world's biggest exporter LNG, as projected for 2022 by S&P Global Commodity Insights? And how will market entrant Germany get on as it seeks to secure LNG cargoes to replace Russian gas at almost any cost?

The fixture list throws up some intriguing match-ups.

US vs Wales/England (Nov. 21, Nov. 25)

England and Wales both face the US in the group stages in very uneven LNG match-ups.

The US has doubled LNG exports since the last World Cup in 2018 and could repeat the feat to 2026 when it will co-host the tournament with Canada and Mexico. Once the Freeport terminal in Texas resumes operations later this year, the US is set to become the world's biggest exporter.

US LNG supplies to the UK have risen strongly so far in 2022, with volumes totaling 7.9 Bcm of gas equivalent in the first nine months, according to S&P Global data. US exports to the UK stood at 4 Bcm for the whole of 2021.

The UK has large LNG import capacity at its three operational terminals – two in Wales (Dragon and South Hook) and one in England (Isle of Grain) – totaling more than 35 million mt/year. According to a media report, a new 10 Bcm US-UK LNG import deal could be announced.

France vs Australia (Nov. 22)

Defending champion and Europe's biggest LNG importer France kicks off against Australia, which is at risk of losing its LNG export crown to Qatar.

Australia led global LNG exports in 2020 and 2021, but has no significant expansion planned beyond the under-construction Pluto T2 terminal.

France, meanwhile, faces its own energy crisis this winter due to record-low nuclear availability requiring power imports from LNG-rich markets like Spain and England. Its demand for LNG is forecast to fall once Germany's LNG infrastructure is up and running and France's 56-strong reactor fleet returns to normal operation.

Japan vs Germany (Nov. 23)

LNG import champ Japan faces LNG newcomer Germany in its opening match.

Germany's Uniper and Japan's largest power generator JERA already agreed to find ways to optimize their LNG portfolios, including the swapping of destination-free cargoes. This could potentially see Uniper's Australian LNG cargoes diverted to Japan and JERA's US LNG supply to Europe to reduce transport days, costs and risks.

JERA has already diverted six cargoes to Europe at the request of the Japanese government, the EU and the US. However, there is no new commitment by Japan to divert surplus LNG to Europe for this winter.

Meanwhile, Germany is on track to commission a first floating LNG terminal before the final in Qatar after Berlin chartered five FSRUs for deployment on its northern coast.

RWE has secured its first LNG cargo for December delivery from the UAE.

No Qatar LNG supply deal has been finalized yet, but Berlin has been vocal on its aim to secure long-term supply arrangements with the Qataris.

In total, Germany plans to have some 30 Bcm/year of LNG gas import capacity infrastructure ready next summer, replacing over half its Russian gas.

Netherlands vs Qatar (Nov. 29)

Gas pioneer Netherlands is to phase out production at Europe's biggest gas field Groningen, while Qatar plans a major expansion of its offshore North Field to feed more mega LNG trains.

Related infographic: Where do Qatar's LNG exports go?

The Groningen closure will make the Netherlands more dependent on LNG via Rotterdam's Gate terminal and the new Eemshaven import terminal, which the Dutch developed in record time.

Off the pitch, a key development is a plan by the European Commission for a new gas price assessment including LNG as it sees the TTF, trading at a premium to LNG prices, no longer reflecting Europe's new gas supply landscape.

On the pitch, the Netherlands and neighbor Belgium are among talented teams that have never won a World Cup.

South Korea vs Portugal (Dec. 2)

South Korea, the K in Platts JKM, again qualified and hopes to repeat its success when it co-hosted the 2002 World Cup with Japan.

Last time, South Korea's shock win over Germany saw the world champs exit in the group stages.

This time South Korea faces Portugal, one of Europe's best supplied markets with its own LNG terminal, sharing a common market with Iberian neighbor Spain and its six LNG terminals.

Knock-out stages

Things get more serious in Qatar with the knock-out stages from Dec. 3.

Like football, LNG is a global game where South American giants Brazil and Argentina expected to play key roles. Brazil, which has not won a World Cup since 2002, has become a major importer of LNG. Argentina's last World Cup success dates back to 1986, but it hopes to reverse not only its football fortunes but also LNG flows, swinging from imports to exports via its Vaca Muerta field – potentially the second largest shale gas resource on earth.

Two huge players, meanwhile, are missing in Qatar: China and Russia. Russia is the world's fourth biggest LNG exporter, while China was the biggest importer in 2021.

China's drop in demand due to COVID-19 restrictions is the biggest overall change to the 2022 global LNG supply-demand balance, according to S&P Global.

Competition away from the pitch

Europe's new hunger for LNG has sharply lifted global LNG prices and prices in Asia, traditionally the premium market, against those in Europe.

European gas prices soared to all-time highs this summer, but a mild start to winter eased price pressure amid reports of LNG tankers queuing up on Europe's shores.

The lack of Russian pipeline gas, however, means Europe still faces a deficit going into 2023.

The DES Northwest Europe LNG marker, assessed by Platts, part of S&P Global, for December is at $26.24/MMBtu, while Europe's gas benchmark TTF maintains a premium. The Platts JKM for December was last assessed at $28.27/MMBtu Nov. 18, S&P Global pricing data showed.

With Takeo Kumagai, Claudia Carpenter, Stuart Elliot, James Tavener, Lawrence Toye and Harry Weber