Soaring demand for liquefied natural gas (LNG) in Europe has triggered a flurry of activity in London, with Asian energy companies looking to maximise booming trade this winter.
Companies including Japan’s Tokyo Gas, Osaka Gas and Kansai Electric and South Korea’s SK E&S are establishing or drawing up plans for LNG trading desks, with China’s ENN, Cnooc, Petro China and Sinochem are also considering moves to the UK, according to The Financial Times.
Europe is the world’s biggest importer following Russia’s invasion of Ukraine last year, and the Kremlin’s supply squeeze has contributed to the continent importing 130bn cubic metres of LNG last year, nearly 40 per cent of its natural gas consumption.
It was highly dependent on LNG to stave off supply shortages last winter, amid fears of blackouts across the continent.
LNG prices in north-west Europe also hit a record high of $78.15 per metric million British thermal units in late August, nearly $10 higher than those for north-east Asia, according to price reporting agency Argus.
The potential of chunkier returns selling to European customers, typically utility groups, than in Asia has drawn the companies to the capital.
London appeals to the energy firms over rival European cities due to its established role as a leading gas trading hub since the discovery of oil and gas in the North Sea in the 1960s.
Tokyo Gas, Japan’s largest gas utility, set up a London trading team in April to deal with price moves in European time, which is deems crucial after the region overtook China and Japan as the world’s main importer of LNG.
Osaka Gas, another big supplier in Japan, has made two new hires in its existing LNG team in London since the full-scale invasion of Ukraine.
SK E&S, the natural gas business unit of South Korea’s conglomerate SK Group, is also planning to expand in London after opening a London office at the end of last year, the company has confirmed.