Simran Joshi
European gas markets have witnessed a significant shift as at least five liquefied natural gas (LNG) cargoes originally destined for Asia have been redirected to Europe in recent days, driven by soaring gas prices following a supply halt by Russia’s Gazprom to Austria’s OMV.
The supply disruption, triggered by a contractual dispute, has intensified concerns over energy stability in the region, prompting traders to seize higher profit opportunities in Europe, where gas prices have surged to their highest levels in nearly a year.
LNG cargoes diverted as European gas price surge
A significant number of liquefied natural gas shipments have been diverted from Asia to Europe in the last few days as the sharp increase in gas prices on the continent has caused the move. This was after Gazprom, Russia stopped supplying gas to OMV in Austria due to a contract dispute.
That played havoc with European gas prices at the Dutch TTF hub, which went above Asian benchmarks and proved more attractive for traders to reroute shipments. “The JKM-TTF spread flipped into negative territory last week amid Russian pipeline gas supply concerns and an upcoming cold spell,” said Laura Page, manager of gas and LNG insight at Kpler.
Several LNG tankers have altered their routes to cash in on higher prices in Europe. For instance, Vivert City, which initially came alongside at the Equatorial Guinean oil terminal as part of a cargo heading for Bangladesh, now turns for Britain’s South Hook terminal.
The Gaslog Windsor and BW Lesmes tankers had been headed for China but are now chartered to the UK’s Isle of Grain terminal, after claiming better access to their prized unloading slots.
UK and Europe Attract LNG Cargoes Amid Transit Challenges
The UK has proven an attractive alternative destination for diverted LNG cargoes, at least: their terminals are less congested than many major Continental hubs. “One of the main reasons ships are switching to the UK, though, is likely that the UK’s terminals weren’t so busy as some of the main Continental terminals,” said Alex Froley, ICIS’s senior LNG analyst.
This spare availability of unloading slots has made the UK an alternative destination for traders experiencing a tight spot in European gas markets.
Outside of the UK, further European destinations are also witnessing increased activity. The Diamond Gas Crystal tanker headed to South Korea has now diverted to the Dutch Gate terminal.
Likewise, the Flex Vigilant tanker that had originally diverted from China is on its way to Europe and awaits further instructions. Meanwhile, Russian gas transit through Ukraine remains stable although Ukraine has announced it will not renew its transit deal with Russia after its expiration this year, adding to supply uncertainties.
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