Page 9 - NorthAmOil Week 47 2021

NorthAmOil COMMENTARY NorthAmOil

the coming years, and illustrate at least some LNG purchases over the coming weeks.
appetite for new long-term supply agreements. By contrast, Europe does not appear to
In the shorter term, while LNG shipments be scrambling to buy additional volumes of
to Asia are rising, they have not yet reached the LNG, even as it struggles with gas shortages
high levels seen last winter, when certain supply of its own. Pipeline supplies of Russian gas to
bottlenecks combined with a spike in demand Europe have been irregular recently, with flows
to send LNG spot prices soaring from pandemic on the Yamal-Europe pipeline briefly reversing.
lows. It is worth noting, though, that while The short-term picture has been complicated
demand from China, Japan and South Korea is further by Germany’s suspension of approval
strong currently, it is weaker in South Asia. That to begin flows on the new Nord Stream 2 gas
region is more exposed to the spot market, and pipeline.
with prices at record highs, this appears to be Despite these developments, however, Euro-
acting as something of a deterrent to buyers. pean LNG imports are expected to be slightly
According to Kpler data, India is set to import lower in November than they were in October,
1.51mn tonnes of LNG in November – the low- at 5.99mn tonnes, down from 6.03mn tonnes,
est level since April 2020, when the pandemic according to Kpler. Refinitiv data also project
first hit demand. Pakistan’s projected Novem- that Europe will import less LNG in November
ber imports of 700,000 tonnes would be the than it did in October, at 7.23mn tonnes, down Congestion in the
lowest since June, and Bangladesh is on track from 7.28mn tonnes.
to import 360,000 tonnes in November, down The figures are still higher than levels of Panama Canal
from 530,000 tonnes in October. European LNG imports a year ago, and certain was one of the
trends do point to some potential for increased
What next? US-European LNG trade. Rystad Energy said in major bottlenecks
The weekly index for LNG for delivery to north its weekly gas and LNG market note on Novem-
Asia rose to $36.70 per million British thermal ber 24 that Western and Southern Europe had that materialised
units ($1,015.12 per 1,000 cubic metres) in imported 5.5mn tonnes of LNG in the month to
the week up to November 19, from $31.50 per date and were on track to exceed October’s total last winter.
mmBtu previously. While this is below the spot of 5.7mn tonnes. The consultancy added that
index for mid-October, it is still 473% above mounting congestion at the Panama Canal may
prices a year ago. be working to Europe’s advantage as US export-
And as LNG shipments to Asia rise, Asia-Pa- ers can choose to remain within the Atlantic
cific shipping day rates are also reported to have Basin rather than send vessels to Asia via the
surged to an all-time high of around $300,000 Cape of Good Hope.
per day for a standard LNG carrier, with vessel Congestion in the Panama Canal was one of
demand outpacing the supply of ships in the the major bottlenecks that materialised last win-
region. ter, so it would not be surprising if buyers and
Despite high prices potentially deterring pur- sellers alike are keen to avoid a repeat of this.
chases on the spot market among some Asian And with day rates so high, shorter routes may
countries, the region still seems set to dominate be seen as advantageous by buyers.™

Week 47 25•November•2021 www. NEWSBASE .com P9