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LNG from new US and Australia projects head to Middle East and South Asia

Singapore — A lack of demand from buyers in North Asia, Southeast Asia, and South America has resulted in cargoes produced from Australia and the US making the long journey to markets in the Middle East and South Asia, an analysis of recent trade flows showed.

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These trade flows are unusual given the longer shipping distances involved, and the supply length still available from the Middle East.

Faced with weak demand from North Asian buyers, who have already had the bulk of their downstream demand locked in by long-term contracts, the additional ramp-up of new production facilities on Australia's East Coast have had to find alternative markets.

The Cool Runner, under charter to Brazil's Petrobras was on its way to South Asia or the Middle East on Tuesday, cFlow, Platts trade flow software, showed.

The vessel had previously loaded a cargo from Gladstone LNG before sailing west. Petrobras had earlier said that it was open to the idea of trading the cargo rather than bringing it back to Brazil.

It was unclear who Petrobras had sold the cargo to, with a source close to the company declining to comment. But the cargo was most likely sold to a South Asian buyer, a trader said.

Similarly, the US' first export project, Sabine Pass, has also had to send its first uncommitted commissioning LNG cargoes to non-Asian markets.

The first cargo shipped from the project was delivered to Petrobras' floating, storage and regasification unit at Rio de Janeiro, Platts cFlow showed.

The third cargo loaded aboard the Gaslog Salem was also going to Petrobras, to the Pecem terminal, shipping data showed.

However, the second cargo loaded aboard the Clean Ocean appeared to be heading to the Middle East and South Asia.

"Demand is mainly coming from the Middle East and India these days," a Singapore-based trader said.

However, Qatari producers were also long in LNG and had been offering competitive prices to their term buyers as well. So if other sellers were trying to compete for South Asian demand, they would have to lower their prices as well, the trader added.

Demand from South Asia and the Middle East was not limitless, a second trader said.

Eventually, the oversupply situation would force more volumes, especially from the US, to be sold into Europe, the trader said.

--Max Gostelow,
--Edited by Irene Tang,