The number of shipments of US liquefied natural gas (LNG) has been outpacing exports to Asia for the second month in a row holding on to Europe as its top destination, according to Refinitiv data.
Compared to December, when the sky-rocketing European prices and demand drove US LNG exports to a record 61% or 7.14 million tonnes per annum (mpta), Refinitiv data showed that last month, about two-thirds of US LNG volumes went to Europe hitting a new record of 7,3 million tons.
The lack of supply drove worsened by the crisis over Ukraine – has highlighted Europe’s dependency on Russian natural gas – which the demand in both months and led to re-routed cargoes from other destinations.
According to consultancy Rystad Energy, the European LNG benchmark, which traded about $30 per mmBtu amid concerns that cheaper Russian gas supplies are failing to keep up with demand, cooled on the Dutch exchange to $27.59 per mmBtu this week, below the Japan Korea Marker (JKM) price for Asia spot gas at $29.12 per mmBtu.
The global head of business intelligence at LNG consultancy and shipbroker Poten & Partners, Jason Feer, noted that this sends a signal of full tanks in Asia that’s not expected to be a big buyer, especially considering the warmer-than-expected weather on the continent.
China even offered to sell up to 45 cargoes of LNG for deliveries this year via Unipec, the trading arm of its crude oil and natural gas company Sinopec Corp.
Only 13% of the US LNG volumes shipped last month went to Asia compared to about 25% in December, while 9% went to the Latin America market.
Although the EU LNG imports hit a record level in January, Ross Wyeno, an analyst at S&P Global Platts expects the LNG demand overall to cool as the winter heating season comes to an.
Wyeno also underlined that Russia cutting off all pipeline gas supplies to Europe is a highly unlikely scenario despite the fact that the Ukraine crisis poses a risk for global gas markets.