Newsroom
Europe is scrambling to secure enough natural gas for winter, with global prices soaring as supplies from Qatar remain trapped behind one of the world’s most dangerous shipping bottlenecks.
Cyprus, meanwhile, is watching the crisis without an operating LNG import terminal of its own.
Spot prices for liquefied natural gas have climbed to around $26 per million British thermal units, according to a Reuters analysis. That is about 150% higher than before the war disrupted shipping through the Strait of Hormuz.
The narrow waterway is one of the world’s most important energy routes and the main passage for Qatari LNG exports. With much of that supply now unable to reach the international market, countries are competing for fewer available cargoes, and the highest bidders are getting them.
For now, Europe is benefiting from an unexpected side effect of the price surge. LNG has become so expensive that buyers in China, India and Pakistan are cutting back, freeing up cargoes for European countries trying to fill their storage facilities before temperatures drop.
Asian LNG imports are expected to fall to their lowest September level in eight years, Reuters reported. European imports, meanwhile, are forecast to rise to almost 8 million metric tons this month and could exceed 10 million tons in the coming months.
But Europe is hardly in a comfortable position. Its gas storage facilities are only around 68% full, well below their usual level at this point in the year. A cold winter or further disruption to global supplies could send prices even higher.
For Cyprus, the international scramble brings the unfinished LNG terminal at Vasiliko back into sharp focus.
The project was supposed to give the island access to natural gas, allowing power stations to move away from more expensive and polluting fuel oil and diesel. Natural gas was repeatedly promoted as a bridge to lower electricity prices while Cyprus expanded its use of renewable energy.
Years later, the terminal is still not operating.
That means Cyprus cannot currently import LNG, turn it back into gas and supply it to its power stations. The island is therefore not directly competing for today’s expensive LNG cargoes, but it also lacks the option of switching fuels when market conditions are favorable.
The latest price shock creates another uncomfortable question: Even when the terminal is eventually completed, will imported gas still produce the savings consumers were promised?
The answer will depend on several factors, including the price of LNG when Cyprus enters the market, shipping and regasification costs, the price of oil, and the cost of carbon emissions. Expensive LNG does not automatically mean higher electricity bills in Cyprus today, because the island is not yet using it. But it could change the financial calculations behind the project.
It also makes every further delay more serious. An unfinished terminal leaves Cyprus dependent on its existing fuels, while a completed one would at least give the country another energy option, even if using that option is not always cheap.
DEFA must now clarify whether the sharp rise in international LNG prices has changed the financial case for Vasiliko, what gas-price assumptions were used when savings for consumers were calculated, and whether those promised savings remain realistic.
Cypriot households have heard for years that natural gas will help bring electricity costs down. With global prices surging and Vasiliko still unfinished, they deserve updated figures rather than the same old promise.
