Page 7 - NorthAmOil Week 04 2022

NorthAmOil COMMENTARY NorthAmOil

Sinopec is offering up to 45 cargoes for delivery on December 20 while travelling from Cheniere
by October, while China National Offshore Oil Energy’s Corpus Christi LNG terminal on the
Corp. (CNOOC) is offering to sell one cargo US Gulf Coast to Asia and headed for the UK
per month between May and November. The instead.
tenders represent roughly 4% of China’s LNG Vessel-tracking data show that the ship
imports in 2021 and the news service described arrived in the UK on January 18. The journey
them as one of the biggest offerings from the required a second transit through the Panama
Asian country. Canal and nearly $1mn in tolls, illustrating the
profitability of selling gas to Europe on the spot
Easing pressure market currently and the fact that the continent
The reported resales are welcome news for is drawing cargoes away from Asia.
Europe, which is trying to address a combination Price differentials between Europe and Asia
of high gas prices, low stockpiles and low pipe- have narrowed since the Hellas Diana changed
line gas deliveries from Russia. The Yamal-Eu- course, but the lower cost of crossing the Atlan-
rope pipeline, which normally delivers gas to tic compared with the longer journey to Asia via
Germany, has been flowing in reverse mode for the Panama Canal means that Europe remains a
a month, and Russia’s Gazprom confirmed ear- more attractive option for sellers of LNG.
lier this week that it had not booked any volumes
to be delivered to Europe via the pipeline next What next? Citigroup has
month. No news has emerged thus far about potential
Meanwhile, the Nord Stream 2 pipeline from buyers for the cargoes being resold by CNOOC projected that
Russia to Germany is ready to enter service, but and Sinopec. Indeed, the LNG industry tends to gas prices have
requires final approvals from Germany and the treat a lot of commercial activity as confidential,
EU, which are not expected to be issued until at and media reports tend to rely on traders and liked peaked for
least the second half of this year. The situation other sources familiar with such activity. As a
is further complicated by mounting geopolitical result, the buyers that emerge may not end up this winter in
tensions and rising fears over a potential Rus- being disclosed, at least until vessel-tracking
sian invasion of Ukraine. The US government data show LNGCs travelling between China and both Europe and
is treating Nord Stream 2 as leverage in its talks Europe. Asia.
with Moscow and has threatened that a Russian In the meantime, Citigroup has projected that
invasion of Ukraine could result in the pipeline gas prices have liked peaked for this winter in
not being able to enter service at all. both Europe and Asia. And Rystad has noted
Against this backdrop, LNG imports to near-term weather forecasts for Europe point
Europe have been on the rise recently. Media to above-average temperatures, which would
reported a “flotilla” of LNG carriers from the dampen the demand outlook for gas for heating.
US arriving in Europe earlier this month, help- As of January 20, benchmark gas futures were
ing to ease some of the upward pressure on reported to have fallen 8.9%, tracking weaker
European gas prices. Indeed, European prices prices in Asia. If European buyers now start pur-
are so high that the Hellas Diana LNG tanker is chasing Chinese LNG cargoes, this could help
reported to have u-turned in the Pacific Ocean spur a further decline in gas prices.™

Week 04 27•January•2022 www. NEWSBASE .com P7