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As winter rapidly approaches in Europe amid a crippling energy crisis, tankers carrying much-needed liquid natural gas (LNG) are causing chaos in ports. Europe's urgent need for natural gas has caused an increase in deliveries to several European ports, but the facilities don't have enough dock space to handle the influx of ships. It has been reported that more than 30 LNG tankers are idling off the coast of Spain waiting to gain access to one of its regasification terminals. Spain has six such import terminals - the largest amount in Europe.
Not only are tankers unable to offload in ports, but they are also being used as storage facilities for extra LNG. Between the delay in getting tankers offloaded and returned to their home ports for refueling and numerous ships being tied up as floating storage, there is increased concern that there will be a shortage of tankers to transport LNG to Europe or other ports around the globe.
In addition to struggling to meet the needs of a panicking Europe, the backlog of tankers sitting off the coast of Spain and other ports is also causing freight rates for LNG carriers to soar. According to data from a Wall Street Journal report, LNG tanker rates have increased sixfold since January. As of this week, rates were at $450,000 per day.
To complicate matters, there could be delays in bringing the Freeport LNG facility back online next month after a fire disabled the Texas facility in June. Without LNG in operation, US gas prices could continue to climb which in turn would drive up LNG prices internationally.
Until European ports are able to offload the LNG sitting in tankers off the coast, prices will continue to rise as Europe's demand remains high and freight rates soar. There seems to be no end in sight for the European energy crisis as attempts to resolve it continue to create further challenges and inflation.
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