Page 7 - EurOil Week 04 2022
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EurOil                                       COMMENTARY                                               EurOil

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

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