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 bound for Asia towards Europe and Turkey.

The fall in temperatures in northern hemisphere is boosting the heating demand in Asia and Europe, and driving up prices.

On Thursday, the price of Asian LNG futures was $11.22 per million British Thermal Units (mmBtu), based on S&P Global Energy Plts Japan-Korea Marker.

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

Ashley Sherman, senior analyst at Vortexa, said that Europe's demand for LNG cargoes is still strong. This is due to the recent cold snap which has accelerated gas storage withdrawals.

He added that Northeast Asia will experience temperatures below normal for the remainder of January. This should keep regional demand and competition in flexible cargoes strong.

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

The tanker Zoe Knutsen that picked up a shipment from Oman's Qalhat Terminal on January 9 was also heading east and had sailed by India and?Sri Lanka, before pivoting and moving southwest on January 15 according to LSEG and Kpler.

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

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

Asyraf Amin, Kpler’s principal?market analysts for LNG & Gas Data, said 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 divert could have been due to a recent increase in the premium for 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)