These are GPS markers of liquid natural gas tankers in the english
channel.
Many are idling or sailing slowly,
much like this other cluster in the gulf of cadiz off the coast of spain.
Each of these ships is carrying enough liquefied natural gas to heat a million homes a
month,
but they can't unload their cargo at least not right now.
Lots of stake the economy would really nosedive if stores of gas
were to run out.
So what's behind these tanker traffic jams and what might they mean for europe's
energy needs This winter,
european nations are racing to store natural gas a commodity the continent
relies on to fuel its factories,
power its cities and heat it's homes.
But recent supply chain bottlenecks threatened to undermine europe's energy
security.
Until recently,
europe relied on Russia for about 40% of the natural gas.
It used to heat its homes and power its industries.
But this year's Russian war in Ukraine through europe into its biggest energy crisis
since the 19 seventies.
Before the war.
About half of the Russian gas that ended up in europe via pipeline was transported by the nord
stream one pipeline which runs under the Baltic sea connecting Russia's Siberian gas
fields to Germany.
But in june Russian gas giant Gazprom began reducing gas flows through the
pipeline.
We are working on the worst possible
scenario then in september Russian indefinitely suspended natural gas flows to europe
via nord stream.
Later that month,
european authorities released footage of the Baltic sea bubbling amid reports of unexplained
leaks from the North stream pipelines.
It was a deliberate act of sabotage.
Putin has launched Russia's first mobilization since world war and since
many months he is using energy as a weapon.
Western governments and intelligence agencies haven't yet named a suspected
culprit with the pipeline is no longer operational,
european leaders have turned to other countries like the United States and Qatar to supply the
continent's natural gas.
But rebuilding europe's natural gas supply chain hasn't been easy to begin with.
There are not enough re gasification terminals for the tankers to offload their gas.
Re gasification terminals are huge plants built from the coastline.
They take in liquefied natural gas tankers.
They turn that liquid gas back into a gas and pump it into the domestic network.
There are quite a few of them in europe,
but they're not distributed evenly.
You have a lot in the UK in spain and in Portugal,
you don't have any at all in Germany compounding.
The issue is a lack of storage,
europe simply does not have enough space to keep the gas,
europe does have a lot of gas in storage.
It stores gas in caverns underground and tanks for the past half century europe
has been able to rely on a very steady supply of Russian gas.
There was no need to build even bigger storage facilities for
now.
Many of these giant ships are serving as temporary offshore gas storage facilities,
which has resulted in part from a market dynamic known as contango.
Contango is a technical term used by traders for a situation where
technology costs less,
if the trader sells it tomorrow,
then it costs if the trader agrees to sell it in several months time and
it's a way in which the market encourages traders to hold onto a
commodity such as gas to store it for when it is needed
later in the year or early next year.
This chart tracks the difference between liquid natural gas prices next month compared to
prices in two months time.
As you can see on september 15th,
a trader would make $3.42 per million british thermal units.
If they held their tanker at sea until november rather than if they offloaded the gas in
october a month later on october 13th,
that gap had more than doubled to about $7.50 per million british thermal
units.
If they sold in december rather than in november,
the original target was to fill storage facilities to 80% of their total capacity
by november 1st,
that target has been met and exceeded far ahead of schedule.
The latest data suggests storage is now at nearly 95% in total
european.
Natural gas prices have plunged more than 70% since hitting an all time high in late
august after storage facilities across the continent filled close to capacity,
but there isn't enough storage to get through into.
If several things go wrong,
for example,
if it's very cold if Russian supplies stop altogether,
and if supplies from Norway or the US get disrupted in some way.