NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

Why are LNG tankers diverting from Asia to Europe?

Published 18/11/2024, 17:07
© Reuters.  Why are LNG tankers diverting from Asia to Europe?
NG
-
GAZP
-
TFAc1
-

Invezz.com - Cargoes carrying liquefied natural gas (LNG) have been diverted from Asia to Europe in the past few days, Reuters quoted data from analytics firm Kpler on Monday.

According to the report, at least five cargoes of LNG have been diverted to Europe after Russia halted gas supplies to Austria’s OMV.

On Saturday, Russia’s Gazprom (MCX:GAZP) halted supplies to the top Austrian gas importer OMV. The move came after OMV had threatened to impound some of Russian gas.

The European gas market is in turmoil after an arbitration court awarded OMV a large sum in compensation in a dispute with its Russian supplier. The former wants to offset the claim immediately.

Barbara Lambrecht, commodity analyst at Commerzbank AG (ETR:CBKG), said:

According to media reports, the next payment date for gas deliveries is 20 November; however, there are concerns that deliveries may be interrupted before then.

European gas prices surge

Gazprom had notified OMV about the planned halt on Friday, which led to a spike in natural gas prices.

This made it more profitable for suppliers to divert gas to Europe rather than to Asia.

Dutch TTF gas prices surged to 46.65 euros per megawatt hour on Monday, its highest level since October 2023.

“The JKM-TTF spread flipped into negative territory last week amid Russian pipeline gas supply concerns and an upcoming cold spell, which saw traders divert LNG cargoes away from Asia and towards Europe,” Laura Page, manager of gas and LNG insight at Kpler, told Reuters.

Several tankers divert to Europe

According to Kpler data, the Vivert City LNG tanker, which was heading to Bangladesh has now been diverted to Britain’s South Hook terminal.

The tanker was loaded from Equatorial Guinea and was diverted on Friday.

Gaslog Windsor tanker also diverted to Britain’s Isle of Grain terminal on Friday. It was loaded with US LNG from Sabine Pass, and was initially headed for China, Reuters said in its report.

Additionally, BW Lesmes tanker, loaded in Nigeria, was also diverted towards the Isle of Grain terminal. The tanker was also headed for China.

Reuters quoted, senior LNG analyst at data intelligence firm ICIS, Alex Froley:

One of the main reasons ships are switching to the UK, though, is likely that the UK’s terminals weren’t so busy as some of the main Continental terminals, meaning there were more spare unloading slots for traders to access when they decided to divert Asian cargoes to Europe.

Meanwhile, the Diamond Gas Crystal tanker was also diverted to the Dutch Gate terminal from South Korea, according to the report.

No threat of supply bottlenecks

According to Eurostat, Austria only accounted for a good 3% of total EU gas imports in 2023.

Commerzbank said that although the share of Russian supplies was over 80% of Austrian gas imports in recent months, it was sharply lower in 2023.

Additionally, the expiration of the transit agreement with Ukraine threatened to cut off gas supplies anyway.

“Since the storage tanks in Austria are over 90% full, there is no threat of supply bottlenecks in the short term,” Commerzbank Lambrecht said.

Furthermore, according to the head of the Austrian energy company, there is no longer any dependence on the Russian gas supplier, as alternative sources have been found.

Lambrecht noted:

Nevertheless, it cannot be denied that this makes the situation even more tense in an already nervous market environment.

This article first appeared on Invezz.com

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.