- Russia's Sakhalin Energy halted a shipment of liquefied natural gas to an Asian buyer, a report said.
- It's the first time gas has been witheld from an Asian buyer, a move could result in blackouts.
- It will have spillover effects in Europe as it gears up for its own energy crisis in the coming months.
Russia halted a shipment of liquefied natural gas to an Asian customer over payment issues to its new energy operator, Sakhalin Energy. It's the first sign that Russia is beginning to withhold natural gas from Asian customers over its energy operations, threatening to throw some of its biggest Asian clients into blackouts this winter.
Two traders familiar with the matter said Sakhalin Energy withheld a cargo of LNG to an Asian buyer on the grounds of payment and a delay in signing a revised contract, according to a report from Bloomberg.
Russia has offered those revised contracts to Asian customers since setting up Sakhalin Energy, a new corporation created to transfer ownership of Russia's oldest LNG facility from a Bermudan to a Russian entity.
The revisions ask LNG buyers to pay with currencies other than the US dollar if western sanctions result in payment issues. But most Asian customers have avoided signing so far, Bloomberg reported.
Withholding fuel from Asian buyers could spell trouble for North East Asia, which has been snapping up LNG in preparation for winter. Japan, Sakhalin's top buyer, is particularly vulnerable to blackouts this winter if shipments are cut, as it sources around 9% of its natural gas from Sakhalin.
That could also have spillover effects to Europe, as Asian customers may eat away at fuel supplies from non-Russian suppliers, which are already strapped for supply as Europe gears up for its own energy crunch this winter.
"Without Sakhalin, North East Asia will have to drag more cargoes away from Europe, intensifying the scramble for gas between Asia and Europe heading into winter that could send LNG prices to unprecedented levels," energy analyst Saul Kavonic told Bloomberg.
US natural gas currently hovers around $9 per million British thermal units, and the benchmark price in Europe has risen to $67 per million BTUs, with the potential to soar even higher under further supply pressure.