US LNG is still a rare visitor to European shores despite low LNG stocks -- especially in northwest Europe -- and high European hub prices.
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Once expected to be the mainstay market for US LNG cargoes, Europe remains relatively untouched by supplies of cheap US shale-based liquefied gas, and current pricing suggests cargoes will continue to be attracted to other, higher-priced markets.
European gas and LNG stocks were drawn down to record low levels at the end of the winter on freezing temperatures, leading to an expectation that LNG supplies would rise over the summer to help refill the depleted stocks.
US LNG from the Cheniere-operated Sabine Pass terminal and the newly operational Cove Point facility were seen as likely candidates to help Europe recover its stock levels in time for next winter.
But cargoes are still few and far between to Europe despite the relatively short distance between the US and Europe, and stubbornly low US gas prices versus high European gas hub prices.
The estimated US LNG breakeven price of $7.35/MMBtu is currently well below the Italian PSV price for June delivery of almost $8/MMBtu, and also lower than the Spanish PBV and French TRS June prices.
But it is still higher than the UK NBP and Dutch TTF prices for June, which are just above $7/MMBTu, according to S&P Global Platts estimates.
Just three US LNG cargoes have landed in Europe since the turn of the year -- one to the UK in March and two -- one to the UK and one to the Netherlands -- in April.
All were supplied as a means to help restock low LNG storage in both countries following back-to-back cold weather systems that hit northwest Europe in late February and March.
But since the start of the year Europe has been unable to compete with higher-priced markets for more US LNG imports.
During the first four months of the year, US LNG exports have overwhelmingly shifted east, with Asian buyers taking 52 cargoes, or roughly 54% of US LNG production over that timeframe, according to S&P Global Platts Analytics.
Asia's share of US LNG demand rose from roughly 32% during the first four months of last year to 54% this year.
Partly, this shift has been driven by high northeast Asian winter demand, which supported spot LNG prices in the region, with the JKM spot Asian LNG price averaging $8.98/MMBtu between January and May, $2.27/MMBtu (or 34%) stronger than 2017.
Over the same period, the US Henry Hub front-month contract price has averaged only $2.81/MMBtu, down $0.29/MMBtu (9%) from last year.
As a result, northeast Asian netbacks -- the destination market gas price minus the Henry Hub price, liquefaction and shipping costs -- to Sabine Pass have averaged $3.91/MMBtu since the beginning of the year, $1.13/MMBtu (41%) stronger than netbacks to northwest Europe, according to Platts Analytics.
South Korea, China, Argentina and Mexico in particular have been soaking up US LNG cargoes from Sabine Pass in recent months.
For May, there are no cargoes of US LNG on the horizon for Europe despite netbacks being favorable, according to the forward curve and Platts pricing.
Turkey is the best priced market for US LNG for May delivery with a netback calculated at $4.32/MMBtu, according to Platts estimates, followed by the UK, Spain and Brazil.
Contractually, however, the majority of the new US capacity to come online this year has been subscribed by Pacific Basin buyers, including Indian GAIL's capacity at Sabine Pass and Cove Point and Japanese buyers Tokyo Gas and Kansai Electric by way of Sumitomo's capacity at Cove Point.
The May pricing also looks like a one-off. For April delivery, netbacks to Japan, South Korea, Egypt and China were all higher than for European markets.
And the pattern repeats for US LNG cargoes for June delivery, when supplies to Japan and South Korea are again more profitable than to Europe.
It had been expected that the liquid UK and Dutch gas hubs would attract US LNG given a perception of an oversupplied global LNG market that would have seen US LNG cargoes taken into the NBP and TTF hubs as "markets of last resort."
Since the first exports in February 2016, Turkey has taken 12 cargoes, Spain 10, Portugal eight, Italy three, Lithuania two, Poland one and Malta one.
US LNG export capacity is set to increase to some 100 Bcm/year by 2020 as other new projects come on stream.