East Med LNG loses historic premium on dwindling demand

The East Mediterranean LNG market is at parity with Northwest Europe for April contracts as weaker shipping rates and dwindling demand pull down prices in what is typically the premium market.

Platts, part of S&P Global Energy, assessed the East Mediterranean LNG marker for April at $9.425/MMBtu on Feb. 24, level with DES NWE marker.

Historically, the Platts EMM has always priced at a premium to NWE given the additional shipping distance as well as higher terminal variable costs, traders said.

According to Platts data, EMM averaged around a 17 cents/MMBtu premium to NWE over Jan. 1 to Feb. 13 before hitting parity to NWE. Currently, Platts EMM-NWE spread for March is assessed at a 7.5 cents/MMBtu premium. However, April has been assessed at parity since the roll to the April contract on Feb. 16.

The flattening of prices between NWE and EMM has been attributed to weakening freight rates further down the curve as well as waning buying interest from Turkey and Greece as the winter season demand winds down towards the end of March.

"Given current storage [levels] in Turkey and their imports of pipeline flows, it looks like they've overbought," an LNG trader said. "Given the market view for shipping too, the cost to take cargo to Turkey vs NWE will be sunk so most seeing it as flat."

On the prompt, Turkey has seen relatively lower imports on the month. Turkish LNG imports stood at 2.03 million mt, or 29 cargoes, in February so far, according to CERA data.

Turkey saw record high imports last month, importing 2.73 million mt, or 39 cargoes, for the full month of January, the highest imports since the data began in 2006.

In the rest of the East Med -- Greece, Croatia and the east side of Italy (Adriatic and Ravenna) -- buying interest has increased month on month. With these remaining EMM hubs importing 20 cargoes in February as of Feb. 25, up from the 17 seen for all of January.

While buying interest has grown month-on-month, softer freight rates and expectations of weaker demand to end winter have seen EMM-NWE on par for April.

"We noticed netbacks getting lower with risk of competition from Asia," an Italian gas trader said.

The Italian system is expecting tightness over the summer months on lower storages and expectations of sluggish injection demand. Hence, it might benefit from the marginal cargoes in the EMM region.

Added pressure can come from the Central and Eastern European demand, given the physical constraints around the region.

"PSV summer is gaining premium over March, [and] the market is pricing Austrian VTP above PSV in April, too," the trader said

"With shipping expected to come off in April, most will see it as a sunk cost," an LNG trader said. "Plus, the big unknown is Egyptian demand... if they decide to divert cargoes that could just flood the Turkish market with more cargoes."

Turkish buying

"I think given current storages and how much Turkey has signed and imported, you will have to see the buying activity hit a wall at some point," another trader said.

Turkey signed numerous deals towards the end of 2025 and has seen strong buying interest to start 2026.

Looking ahead, demand from Turkey could see a relative slowdown, with another trader adding: "flows from Russia and Iran will strengthen and their peak this season will calm down."

Sentiment remains mixed on how Turkey will price versus NWE. With market participants pointing towards the expectation of freight rates dropping, and shipping being seen as a sunk cost, other market participants disagreed.

"Freight [is] rallying now though," an Atlantic-based market participant said.

"April shouldn't be that weak for freight. Freight stays elevated. We're not going back to the lows. Freight gone up for a reason, but more Asian pull."