US still top supply source for European LNG imports
Europe still receiving most gas supply from Norway
The US continues to dominate LNG supply into the European market despite weaker arbitrage economics, with healthy pipeline supply from Norway also aiding local restocking needs during the injection season, analysts at S&P Global Commodity Insights and traders said.
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The US has remained the strongest source for European LNG imports since 2021 after overtaking Russia in 2020 and Qatar in 2021, Commodity Insights data showed.
US LNG supply to Europe (excluding Turkey) in May was 4.4 Bcm, more than double the 2 Bcm received from Russia. And in the first five months of the year Europe imported 29.2 Bcm from the US and around 10.5 Bcm from Russia.
That compares with 34.4 Bcm from the US and 9.2 bcm from Russia in the same period last year.
However, Asia’s favorable arbitrage economics over Northwest Europe meant US LNG supplies to Europe eased in May. Meanwhile, cargoes from Russia’s Yamal LNG have remained relatively steady since the start of this year, Commodity Insights data showed.
“Better netbacks to Asia started to divert US LNG cargos away from Europe already from the end of last winter,” said Alija Bajramovic, senior research analyst for European and Russian LNG at S&P Global Commodity insights. “From 71 US cargos delivered to Europe (excluding Turkey) in January, we came to only 43 cargoes in May,” he said. “For comparison, there were 66 cargos originating from US in the same period of 2023.”
Platts, part of Commodity Insights, assessed the DES Northwest European marker for August at $10.815/MMBtu on June 20. The JKM — the benchmark price for delivering LNG cargoes into Northeast Asia — was assessed at $12.872/MMBtu on the same day.
European prices have been tailing those of Asia, as buyers continue to be priced out of the global competition for seaborne cargoes. Demand in Europe remains relatively depressed while heatwaves in Asia have kept cooling demand strong in the region, leading to greater reliance on LNG imports.
The US is often referred to as a swing supplier for LNG, reacting to stronger demand hubs with higher price levels.
Bajramovic said: “US cargoes, whose role in European supply and demand dynamics is to act as a marginal source of supply to Europe, are simply chasing for better netbacks.”
Meanwhile, Norwegian gas flows to Europe remain the strongest source of pipeline gas.
Over the first five months of the year Europe imported 37.5 Bcm of gas from Norway, according to Commodity Insights data.
Around 50 million cu m/day of gas is exported from Russia via the TurkStream pipeline, with around 40 million cu m/d of gas flowed through Ukraine to Central Europe.
“A higher share of Russian total [gas and LNG] exports to Europe comes more as a result of low demand for LNG due to overall low gas demand, rather than as a result in change of supply patterns to Europe,” Bajramovic said. “Russia remains a marginal supplier of gas to Europe.”
Source link : https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/lng/062124-norway-us-remain-the-two-pillars-for-gas-lng-supply-to-europe
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Publish date : 2024-06-21 07:00:00
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