Nord Stream pipelines set to be mothballed boosting LNG shipping

The two pipelines, each consisting of two pipes built by Russia’s state energy firm Gazprom, were damaged by unexplained underwater blasts last year. Three of the pipes are damaged while one remains intact, according to a Reuters report. Russian gas exports through Nord Stream 1 were reduced sharply following the country’s invasion of Ukraine last February. The new Nord Stream 2 was not commissioned.

According to the Reuters article, some of which was produced in Russia and therefore subject to reporting restrictions, Gazprom believes it is technically feasible to repair the pipelines. However, European countries have turned to other sources of gas in urgent moves to safeguard energy security. Amid continuing hostilities in Ukraine and no sign of any form of settlement, a resumption in Russian gas exports to Europe is unlikely any time soon.

As European nations have turned to other sources of gas, notably the US, supplies by sea have become increasingly important and an already buoyant LNG sector is now running at full capacity.

The relatively small number of shipyards capable of building highly sophisticated LNG tankers are almost full until 2027 although several Chinese shipbuilders have geared up recently to build these vessels and add capacity. 

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They include China Merchants Heavy Industry which won a four, plus four, ship order thought to be from Denmark’s Celsius group late last year. Yangzijiang Shipbuilding, meanwhile, clinched an order for two 175,000 cu m vessels from an undisclosed European owner last October. And Abu Dhabi National Oil Company has contracted six firm 175,000 cu m ships at Jiangnan Shipyard, which is also building a smaller 80,000 cu m vessel for Jovo Energy, a Chinese trading firm.

LNG carrier demand is likely to continue rising for years to come. The US is likely to overtake Australia and Qatar as the world’s largest LNG exporter this year, according to Wood Mackenzie, an energy consultancy, partly as a result of resumed exports from the Freeport LNG terminal, damaged by an explosion last June. US LNG exporters could reach 89 million tonnes this year, the consultancy said.