European LNG exports to Asia hit high as prices tighten

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Europe exported a record amount of liquefied natural gas (LNG) to Asia in September, according to data released on Friday, even as lower supply pushed European gas and electricity prices to new heights.

Europe shipped around 0.48 to 0.51 million tonnes of LNG to Asia, mostly from South Asian countries, breaking the previous monthly record in February 2018, according to ship tracking data from Refinitiv Eikon and the Kpler data intelligence company.

While it is customary for Europe to re-export LNG cargoes, the higher than usual volumes to Asia come at a time when gas stocks in Europe are lower than usual, which pushed prices to record highs.

Asia competes with Europe for LNG to meet an expected increase in winter heating demand, as the main buyer, China, grapples with power shortages.

“The most expensive additional offer that can be sent east is re-exported European cargo that includes additional costs for reloading and leasing tanks,” said Oswald Clint, senior analyst at Bernstein Energy, in a note. .

Re-exports from Europe “will make it difficult for … a quick return of 2-3 (billion cubic meters of natural gas) to storage and lower gas prices,” he said, adding that ‘around 2 to 3 Gm3 of gas are needed to enter stocks for gas prices to normalize.

LNG re-exports from Europe are typically done by companies with portfolio positions that have offtake agreements at terminals in the region, a Singapore-based industry source said.

“Re-exports usually originate from France, Spain and the Netherlands and are not unusual … could also be used to meet forward commitments or to cover the shortage of shipments,” the source added.
Source: Reuters (Reporting by Jessica Jaganathan in Singapore and Ron Bousso in London; edited by Jason Neely, Steve Orlofsky and Alexander Smith)


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