U.S. LNG cargoes are poised to shift to Asian ports as prices fall in Europe, said a new Rystad Energy LNG and gas market update, sent to Rigzone on Wednesday.
“Gas prices at the Netherlands-based Title Transfer Facility (TTF) fell 14 percent to around $9.4/MMBtu from July 11 due to weak demand and healthy supply,” Masanori Odaka and Ade Allen, senior analysts at Rystad Energy, said in the update.
“In Asia, LNG spot prices are hovering around $11/MMBtu for August delivery from July 11, with the monthly average expected to settle at $12/MMBtu or slightly below. This has incentivized some players with free LNG cargoes in the US to route their LNG to Asia instead of Europe,” they added.
“However, finding Asian importers may be difficult as some countries still face high inventory, subject to fluctuating demand over the summer,” the analysts continued.
In the report, analysts noted that LNG spot prices for delivery from northwest Europe were around $8.9 per MMBtu on July 11, which they noted was an 18 per cent lower for the week. Analysts also noted that Europe continues to pump gas into storage, “with storage levels well above 2021 and 2022 for this time of year.”
“Storage facilities are 80.1% full, at around 90.9 billion cubic meters, well positioned to reach the 90% target by November,” the analysts said in the update.
“The withdrawal rate is currently around 29.8 million cubic meters per day with an injection rate of 279 million cubic meters per day,” they added.
Analysts noted in the update that, in the Asian spot LNG market, several tenders emerged for the sale of Indonesia’s Bontang LNG for September and October delivery, “with deadlines on July 11”.
“On the buy side, pockets of demand emerged from South Asia, while buying interest from East Asian importers remained limited despite strengthening downstream demand in some countries,” analysts said in the update.
“LNG inventories from China and South Korea … remain high, causing some importers to delay the delivery of cargoes. Higher-than-normal inventory levels in East Asia could deter major Northeast Asian buyers from spot market purchases,” they added.
“At the time of writing on July 12, players with US-origin LNG cargoes are likely to take their volumes to Asia rather than Europe as arbitrage is open for the September and October delivery, even when factoring in the full shipping cost. Consequently, we will likely see more US-origin LNG in Asia in the coming months,” the analysts continued.
In part of the update written only by Allen, the Rystad analyst said U.S. LNG exports averaged 1.75 Mt last week, but warned the figure could be lower this week “due to possible problems on Sabine Pass Train 3”.
“We expect exports to average 13 billion cubic feet per day in July, barring unforeseen circumstances,” Allen said in the update.
“Robust exports will be needed to maintain market balance, especially as production remains resilient,” Allen added.
LNG Exports, US-EU Working Group
In its latest Short-Term Energy Outlook (STEO), which was released earlier this month, the US Energy Information Administration (EIA) projected US gross LNG exports to reach 12,040 million cubic feet per day in 2023 and 13.31 billion cubic feet per day. day in 2024. In its previous STEO, which was released in June, the EIA projected U.S. gross LNG exports to be 12.07 billion cubic feet per day in 2023 and 12.73 billion cubic feet per day in 2024 .
The EIA’s latest STEO highlighted US gross LNG exports at 10.59 billion cubic feet per day in 2022.
In a joint statement on the US-EU working group on energy security released on April 3, the White House and the European Commission said the working group has made great progress in achieving its goals to reduce the EU’s dependence on Russian energy.
“The United States is more than doubling its goal to ensure the delivery of an additional 15 billion cubic meters of liquefied natural gas to the EU,” the statement said.
“Last year, US exports to the EU were 56 billion cubic meters, up from 22 billion cubic meters in 2021. The EU was the largest destination for US LNG exports, representing more than 52 percent of supplies,” he added.
“At the end of 2022, Russian gas accounted for only 16 percent of EU gas imports, down from 37 percent in March 2022,” he continued.
The statement notes that the task force’s priorities for 2023 will include continued assessments of LNG markets and ensuring US LNG deliveries to Europe of 50 billion cubic meters this year.
“In the coming months, the task force will continue to work to maintain a high level of US LNG supplies to Europe by 2023 of at least 50 billion cubic meters,” the statement said.
“This is necessary considering the difficult supply situation and the need to ensure storage fill for the upcoming winter 2023-24,” he added.
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