Asia loses LNG flows to Europe, as an increasing number of US LNG cargoes are being sent to the Old Continent and the Atlantic basin to take advantage of wide premiums, Platts reported citing traders and market sources. The price spread between Asian and European spot prices nears $15/MMBtu.
This week alone, at least five LNG cargoes headed to Asia were diverted to European ports, including cargoes loaded from Equatorial Guinea, Nigeria’s Bonny LNG terminal, and US LNG terminals, according to shipbrokers.
Data Intelligence firm Kpler said it has listed more tankers diverting towards Europe from Asia and other destinations. The diversions mean Asia could see fewer LNG inflows in coming weeks while spot prices remain significantly below Europe.
The spread between JKM in Asia and the Europe’s leading natural gas benchmark, the Title Transfer Facility (TTF) widened to $10/MMBtu on Dec 21, with one major Chinese end-user saying it was wide enough to incentivize loadings from Southeast Asia and Australia to the Atlantic on paper, although the reversal in shipping flows has not reached such extreme levels.
“The economics support reverse flows now, but there is a pecking order,” Platts quoted a Pacific basin producer as saying .“The whole world is sending volume to Europe now. US and Middle East volumes will be more competitive. But things can change suddenly, if a cold front hits Asia and cargoes are already flowing to Europe.”
Felix Booth, head of LNG at energy intelligence firm Vortexa told Reuters that in many cases cargoes are turning around in the middle of a voyage and heading to the highest price markets in Europe.
Meanwhile, a drop in LNG spot shipping rates is helping arbitrage into Europe from the Atlantic basin and Middle East suppliers. Day rates fell to $115,000/day in the Pacific basin on Dec. 21, from as much as $320,000/day at the end of November, S&P Global Platts data showed.
