Qatari LNG flotilla reaches Europe, supplants top exporter USA

London — Redirected Qatari LNG shipments originally destined for Asia have arrived into Europe en masse, and wrestled market leadership in the region away from the US, data from S&P Global Platts Analytics showed.

Tumbling demand, and force majeure declarations in China and India as a consequence of the coronavirus pandemic have resulted in Qatari production being shipped to European markets instead, by the global players contracted to take these volumes away.

Meanwhile, the first signs of US exports yielding to the competitive global environment are starting to emerge, as production reaching European shores receded during the month of April amid weakening economics, and ahead of reported cancellations in June.

Overall LNG imports into Europe's liquid traded markets -- namely France, Spain, Italy, Belgium, the United Kingdom and Netherlands -- amounted to 7.2 million mt during April, which is equivalent to 9.939 billion cu m of natural gas once reheated.

This represented a 6% rise in receipts on the year, but a slight drop of 3.5% on the month, perhaps signaling that European imports may have peaked for the summer.

Qatar's monthly deliveries to the region have increased by 150% since February, claiming a 30.7% share of exports. The US relinquished its position as top exporter, but nevertheless held on to 23.8% of the market, while Russian production dipped slightly, now holding a 19.9% slice of demand for physical volumes.

Pocketed

Despite Europe being under significant coronavirus restrictions itself, pockets of demand for LNG still exist in and around where the bigger LNG players are operating in Europe.

The majority of surplus Qatari volumes have been sent to the UK and Belgium, where recipients of this production additionally hold long-term regasification capacity into these country's respective gas grids. These countries welcomed 21.4% and 12.4% of production shipped to the area in April, with the latter remarkably down by 41% on the month.

Belgian importers drawing upon Russian supply for re-export in the last couple of months have now found limited opportunity to do this, with only two reloads from Zeebrugge observed in April, compared with eight in March.

Meanwhile, France set a new record for monthly imports in April, welcoming 2.868 Bcm of natural gas equivalent; comfortably higher than any other European country, as it absorbed volumes from the US and Russia which last month might have made landfall in current Qatari targets.

The Netherlands also achieved a new record in physical import, as it mopped-up surplus LNG from around the world to welcome 1.083 Bcm of natural gas equivalent in April.

Conversely, Spain exhibited less appetite for LNG, importing its lowest quantity in 12 months during April. Down by nearly a third on the month, the country imported 1.511 Bcm of natural gas equivalent in April, reflective of a lull seen in last year's shoulder season, as well as a comparative lack of available storage space and interconnectivity to stimulate demand for LNG.