Save for later Print Download Share LinkedIn Twitter Global natural gas and LNG markets are in turmoil. Supply is tight worldwide, keeping markets on the boil with little prospect of relief before the Northern Hemisphere winter. Prices in Europe and Asia have hit $25 per million Btu — almost unheard of for this time of year — while US Henry Hub prices are above $5/MMBtu. Asian LNG prices, which are closely correlated with prices on the Dutch TTF hub, Europe’s de facto benchmark, are now the equivalent of oil at nearly $150 per barrel. A wide range of factors are behind the tightness in all three of the main consuming regions — Asia, Europe and North America. And LNG trade is proving no match for the current imbalance, leaving high prices as the only alternative. Extreme weather, restocking, tight supply, underinvestment, high EU carbon prices, Gazprom’s inability or unwillingness to meet incremental European demand and uncertainty over the Nord Stream 2 start date have all contributed. But the dizzying ascent starkly illustrates how supply is failing to keep up with post-pandemic demand rebounds in China and Latin America.Russian gas production has increased this year but pipeline exports to Europe have not. That has prompted speculation that Gazprom is refilling storage and meeting higher domestic demand — or using exports as leverage to hasten the start-up of the new Nord Stream 2 pipeline to Germany, which may be pushed back until 2022.In the US, production has risen year on year, but increases have been kept in check by major listed producers under shareholder pressure to keep output flat and direct more cash to investors. Production could rise further as the rig count increases, but LNG operations are already running flat out. If winter is cold and Henry Hub jumps above $10/MMBtu, as some analysts predict, LNG exports could fall as capacity holders elect to sell gas back into the market rather than pay to liquefy and ship it overseas.The situation has been compounded by supply problems and lack of feed gas at several legacy LNG plants, which highlights the need to invest in new capacity. In the Atlantic Basin, Trinidad and Tobago’s Atlantic Train 1 remains off line due to feed gas shortages; Norway's Snohvit won't restart until March 2022; Peru LNG has just resumed loadings after shutting because of technical problems in June; and Nigeria LNG has to date sent out 41 fewer cargoes this year than last, according to Kpler shipping data. Egypt's LNG export future looks sketchy and Malaysia’s Bintulu has been hit by supply problems at a new offshore field. Following Corpus Christi Train 3 in Texas earlier this year, the only new projects due to be completed in late 2021 or the first half of 2022 are Sabine Pass Train 6 and Calcasieu Pass, again in the US.The price rally is a sober reminder that LNG's liquidity is limited and the market can be extremely volatile. That could imperil industry efforts to penetrate new sectors and promote LNG in emerging markets that still burn liquids and coal. It also coincides with government efforts to set out new climate commitments ahead of COP26 in Glasgow that balance energy transition goals against affordability, supply security and sustainability. Renewables are an ever-greater threat. Solar and wind have their own challenges in terms of intermittency, grid stability and availability of raw materials, but they incur zero fuel costs, suffer no price volatility and negate the need for carbon capture and storage. A bruising winter for global gas markets could have serious longer-term implications for their future demand growth.Clara Tan is Singapore bureau chief at Energy Intelligence, Tom Haywood is senior markets reporter and Daniel Stemler is LNG reporter for the Atlantic Basin.