News
19/11/24
LNG diversions to Europe reach double digits
London, 19 November (Argus) — At least 11 LNG carriers have likely diverted to
Europe from Asia and Egypt over the past week, as European delivered prices now
offer higher returns than Asian delivered prices, and operational issues delay
deliveries in Egypt. Of the 11 cargoes, seven have diverted away from sailing
for Asia round the Cape of Good Hope towards Europe, and four have diverted from
Egypt, judging by shiptracking data from Vortexa (see table) . This does not
include the 173,400m Myrina , which was idling in the mid-Atlantic today. One
carrier — 174,000m³ Aristos I — had already passed the Cape of Good Hope, before
turning back towards the Atlantic basin. Assuming all carriers are holding full
cargoes, this totals around 860,000t, or 13.2TWh of LNG. Northwest European
delivered prices rose above corresponding northeast Asian prices last week ,
prompting diversions from Asia to Europe. The inter-basin arbitrage was already
closed, although firms with surplus shipping capacity that they viewed as a sunk
cost because of long open vessel lists were still willing to send Atlantic basin
cargoes to Asia as the opportunity cost of the longer journey time was limited
to the cargo loss through higher boil-off during the voyage. But Europe's
discount to Asia has narrowed, and even inverted late last week, with the spread
between the two markets less than the boil-off cost difference between US
deliveries to Europe and to Asia, incentivising diversions to Europe. The extra
boil-off losses amount to around 39¢/mn Btu when shipping a cargo from Sabine
Pass to Incheon via the Cape of Good Hope instead of Rotterdam, assuming a
northeast Asian delivered price of $14.05/mn Btu, a sailing speed of 17 knots
and a 160,000m³ cargo with a 0.1pc daily boil-off rate. The Argus Northeast Asia
(ANEA) January delivered price closed at a 49¢/mn Btu premium to the northwest
European December des price on 7 November, enough to incentivise deliveries to
northeast Asia instead of Europe for firms with sunk shipping capacity as the
spread was wider than boil-off losses. But the ANEA January price on 14 November
fell to a discount to prompt northwest European des prices, incentivising
diversions to Europe. And four carriers have diverted away from Egypt, where
delays to a tight delivery schedule have been created by operational issues at
the country's 6mn t/yr Ain Sukhna terminal, according to market participants.
One of the terminal's two regasification trains has been experiencing
operational difficulties, halving the terminal's regasification capacity, they
said. The country last imported a cargo on 16 November — nine days after the
previous delivery. The terminal's Hoegh Galleon floating storage and
regasification unit has a peak regasification rate of 750mn ft³/d (7.7bn m³/yr),
equivalent to about 16,500 t/d, meaning that it could regasify a 72,000t
standard-sized cargo in 4-5 days when operating at full capacity. By Martin
Senior Diversions to Europe m³ Carrier Capacity Diversion date Approx diversion
location Diversions from Asia BW Lesmes 174,000 13-Nov West Africa Gaslog
Windsor 180,000 14-Nov West Africa Vivirt City LNG 174,000 15-Nov West Africa
LNGShips Empress 174,000 18-Nov Carribean Diamond Gas Crystal 174,000 14-Nov
Carribean Flex Vigilant 174,000 14-Nov Carribean Aristos I 174,000 18-Nov
Madagascar Diversions from Egypt British Listener 173,000 13-Nov Mediterranean
LNG Harmony 174,000 14-Nov Mid-Atlantic Axios II 174,000 14-Nov Mid-Atlantic
Pacific Success 174,000 16-Nov South of Suez — Vortexa, Argus Send comments and
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