Ships carrying liquefied natural gas destined for Asia are changing tack midvoyage to supply European consumers willing to pay a large premium, as prices across the region surge to new peaks.
For much of the year buyers in China, Japan and South Korea have outbid Europeans for shipments of the super-chilled fuel, used in power stations to generate electricity.
But with storage now full across the region, uncommitted cargoes from the Atlantic basin that were heading for Asia are being turned around by their owners and sent to Europe to cash in on soaring prices and demand. On
Tuesday, European gas prices leaped 23 percent to a record €182 per megawatt-hour as Russian gas flows on a key pipeline stopped.
“Europe’s gas market has now broken clear,” said Ciaran Roe, global director of LNG at Platts. “Every major destination market for LNG cargoes is below the major European gas hubs.”
According to data from Platts, the difference between European and Asian prices is currently the widest on record.
Spot LNG shipments to Europe were priced at roughly $48.5 per million British thermal units compared versus $41/MMBtu in Asia. During October and November prices in Asia had averaged $5/Mmbtu above those in Europe, the brokerage said.
“Soaring spot gas prices in Europe are prompting some rare cargo movements,” said Alex Froley, an analyst at research consultancy ICIS, which tracks LNG tankers.
Those movements include the diversion of US LNG vessels bound for Asia backed towards European ports and the first shipment of Australian LNG to Europe in more than a decade.
Minerva Chios, a US LNG tanker, was heading east near India on December 15 but has since turned round and was now on course for the Suez Canal, suggesting a delivery to Europe, Froley said.