European LNG regas rates resist coronavirus outbreak as March levels climb

London — European LNG regasification levels are set for both a monthly and annual increase as supply of the fuel into European gas grids showed no signs of slowing down despite the region having become the epicenter of the coronavirus outbreak.

Between the gas days of March 1 and March 19, European LNG regasification (Belgium, France, Italy, the Netherlands, Poland, Portugal, Spain, the UK) averaged 328 million cu m/d, up 9% from the February average of 301 million cu m/d and further ahead of the 291 million cu m/d in March last year, data from S&P Global Platts Analytics and National Grid showed.

Moreover, March-to-date levels are close to November 2019's record high when LNG regasification averaged 337 million cu m/d as LNG market participants have failed to ramp down supply into European grids.

LNG regasification in Europe has held steady despite the weaker demand in the region due to several countries now in lockdown because of the coronavirus pandemic, and with Norwegian flows increasing and Russian flows steady, market participants have begun to inject into storage reservoirs to balance the system.

LNG regasification in Europe so far in 2020 was 28% higher on the year and more than double the five-year average for the time of year.

However, the pressure of arrivals into Europe may ease as higher JKM prices attract LNG cargoes away from the Atlantic Basin and into Northeast Asia.

The premium of the JKM to LNG prices into Europe has risen in recent weeks, with the Platts-assessed Northwest Europe marker for delivered LNG cargoes for May at a $1.182/MMBtu discount to the JKM on Thursday.

The discount to the JKM of the Platts-assessed Mediterranean Marker was $1.132/MMBtu.

LNG market participants say the spread is wide enough to incentivise diversions into markets in the Asia Pacific.

Sources said that cargoes from production sites in the Atlantic Basin have been pursuing Asia Pacific prices for some time, though Europe is likely to remain long on deliveries.

The increase in diversion has also caused LNG shipping rates rise -- the Platts-assessed Atlantic day rate is currently at $45,000/d for a spot charter over the next 25-45 days, up from $37,000/d at the start of March.