Page 5 - EurOil Week 47 2021

EurOil COMMENTARY EurOil

The Corpus Christi LNG
terminal in the US.

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

Week 47 25•November•2021 www. NEWSBASE .com P5