As Europe Premium widens, LNG tankers divert their eastbound route

Shiptracking data shows that traders are taking advantage of higher gas prices in Europe compared to Asia by diverting two LNG tankers originally destined for Asia towards Europe and Turkey.

The fall in temperatures in the northern hemisphere is boosting heating demand. Prices are rising?in both Asia and Europe, and regional competition for LNG supplies is increasing.

On Thursday, the price of Asian LNG futures was $11.22 per 100,000 British thermal units.

The benchmark front-month contract for the Dutch Title Transfer Facility hub was closed on Thursday at 38.22 Euros per megawatt hour, or $13.17 per MMBtu. This price has been boosted by the cold weather in recent days and the low levels of storage.

Ashley Sherman, Vortexa's senior analyst, said that "Europe is still a strong market for LNG cargoes, despite the recent cold snap which has accelerated gas storage withdrawals."

He added that Northeast Asia is likely to experience temperatures below normal for the remainder of January. This should maintain regional demand, and competition, for flexible cargoes.

Clean Resolution was a recent diverted tanker, carrying cargo from Corpus Christi on the U.S. Gulf Coast. On January 21, Kpler's and LSEG's data show that it was heading south, before turning northwards towards Europe. Kpler lists Mugardos, Spain, as its destination.

LSEG data and Kpler showed that the tanker Zoe Knutsen had also been eastbound, and had sailed by India and Sri Lanka before pivoting and moving southwest on January 15.

According to LSEG, the tanker will arrive in Marmara Ereglisi on February 12 after crossing the Indian Ocean and passing Madagascar.

Oman's Qalhat plant ships LNG to Asia. Its cargoes are shipped to Japan, China and India.

Asyraf?Amin, Kpler’s principal market -analyst, for LNG & Gas, stated that the tanker first signaled Batangas in the Philippines before switching to Milford Haven?in the United Kingdom, and now Ereglisi?in Turkey.

He added that the diverted traffic could have been caused by the recent widening of the premium on the Dutch TTF gas hub over the Japan-Korea Marker.

The TTF is a widely-used price benchmark for LNG delivery into Europe. Meanwhile, the JKM is a benchmark price assessment of LNG for physical cargoes at spot prices in Asia.

(source: Reuters)