UK Stops Russian LNG Imports // Germany's Transport Minister Wants to Keep Nuclear // Asia's LNG Market Braces for Uncertainty

UK Stops Russian LNG Imports

The United Kingdom has officially quit buying Russian liquified natural gas.

“Today the UK has ended all imports of Russian Liquefied Natural Gas. We’re cutting Putin off from funding his illegal war and supporting countries around the world to reduce their own dependency,” the Foreign Office said.

Russian natural gas has been hard to kick for the UK and the EU. America has stepped up to become the region's major supplier, but America's production capacity isn't expected to increase until 2026--if all goes right.

The UK has also moved away from Russian uranium for its nuclear power plants. The government has just created a nuclear fuel fund to encourage the use of domestically produced nuclear fuel.

According to the UK's Energy and Climate Minister, Graham Stuart, Britain "will allocate $90 million (£75 million) in government funding in a bid to support the development of alternatives to Russian fuel supply and strengthen UK energy security." Oilprice.com reports, "The recent British Energy Security Strategy (BESS) has the ambition to deploy up to 24GWe of nuclear power by 2050, around 25% of the UK’s projected electricity demand then."

“Record high global gas prices, caused by Putin’s illegal invasion of Ukraine, have highlighted the need for more home-grown renewable energy, but also UK generated nuclear power – building more plants, and developing domestic fuel capability,” Minister Stuart said.

Germany's Transport Minister Wants to Keep Nuclear

German Transport Minister Volker Wissing has called for an expert committee to determine whether or not Germany's nuclear power plants can be kept running for longer. His request has re-opened a factional dispute within Prime Minister's Sholz's coalition.

In 2022, Germany's determination to free itself of the Russian gas inspired calls to keep what was left of the country's nuclear fleet running.

"Late last year, Social Democrat Scholz attempted to suppress a row between the environmentalist Greens, strong proponents of an exit from nuclear power, and the liberal Free Democrats by ordering that all three be kept running until April," reports Reuters. "But Free Democrat Transport Minister Volker Wissing reignited the argument, telling the Frankfurter Allgemeine that the environmental benefits of electric cars would be reduced unless they were charged using nuclear energy, which is emissions-free."

Those critical of the nuclear exit say that closing the plants will increase Germany's already deepening dependence on coal. The German Greens, meanwhile, say that more renewables will save the German grid.

Here's a snapshot of Germany's grid from yesterday afternoon:

Asia's LNG Market Braces for Uncertainty

Asia's LNG market is in for a choppy 2023 as it heads into troubled waters.

"At the macro level, rising interest rates and efforts by central banks to control inflation will directly impact economic growth and energy demand in most economies, including electricity consumption and natural gas demand. Foreign currency reserves and the strength of the dollar will be overarching concerns for the LNG imports of most Asian economies, even as governments fight to stave off a looming recession," reports S&P Global. "S&P Global Ratings expects global GDP growth of 2.2% in 2023 compared with 3.4% in 2022, followed by a rebound of 3.1% in 2024."

China's sluggish growth played a huge role in capping natural gas prices. But now it appears the CCP is abandoning its "zero covid" policy after public backlash and economic pain. China's demand will play a deciding factor in the state of Asia's LNG market this year.

Here are the major near-term trends to watch: Asian gas inventories after winter and the impact of sanctions and price caps on Russian LNG exports to the region.

Aside from that, prices will be determined by regional decisions about LNG supply and regasification projects, fuel switching, interventions in the gas market, and long-term contractions.

"Market participants expect stalled upstream investments by national oil companies in India, China and Southeast Asia, including Petronas, PTTEP and Pertamina, in gas projects to move ahead. Meanwhile, demand-side investments in regasification will grapple with long-term gas supply issues, such as countries planning to become new LNG importers -- Philippines, Vietnam and Sri Lanka -- or those expanding current capacity like India and China," reports S&P Global.

If prices get high enough, we can expect more conflicts between Asian governments and gas suppliers, as politicians fight to suppress prices.

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Conversation Starters

1. Canada's nuclear refurbishment has reached important milestones. "Bruce Power and its partners have completed the bulk of the construction phase of the major component replacement (MCR) outage at Bruce unit 6 and are transitioning to activities to bring the unit back online in the fourth quarter of 2023. Meanwhile, Ontario Power Generation (OPG) is preparing to start work on its third reactor refurbishment and is on track to complete all four by 2026," reports World Nuclear News. "Unit 6 is the first of six Bruce reactors to undergo MCR as part of the company's Life-Extension Program, a long-term investment programme to update all eight Bruce reactors and secure the site's operation until 2064."

2. Solar energy emerges as a major victor in the latest Omnibus Bill. "Solar projects for local government buildings and facilities are set to spread across New Hampshire and other states in fiscal 2023 thanks to special funding requests by lawmakers from across the country. Sen. Jeanne Shaheen (D-N.H.), for example. secured funding for six solar installation projects in her home state as part of the year-end omnibus spending package that passed the Senate on Thursday and will clear the House on Friday," reports E&E News. "In all, lawmakers used the revived earmarking process to fund 50 solar projects for the current fiscal year, a twofold increase from 19 projects funded by the fiscal 2022 spending package earlier this year."

3. Japan has imported LNG from Russia for the first time in months. "Japan is set to import its first crude oil shipment from Russia in more than half a year, as the government pushes energy importers to stockpile fuel in a bid to avoid future shortages," reports Bloomberg. "The Aframax Zaliv Baikal vessel issailingto Japan after loading from the Sakhalin-2 facility in Russia’s far east on Wednesday, according to ship tracking data compiled by Bloomberg. Japan hasn’t imported a Russian oil shipment since May, shipping data show."

Crom's Blessing