Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Natural Gas

Feature: US LNG makes negligible impact on European gas market

Agriculture | Electricity | Energy | Electric Power | Emissions | LNG | Natural Gas | Oil | Crude Oil | Refined Products | Shipping

Market Movers Europe, Feb 24-28: IP Week goes ahead despite coronavirus fears and risk of protests

LNG | Natural Gas | NGL

Platts LNG Alert

LNG | Natural Gas | Shipping | Dry Freight | Marine Fuels | Tankers

Bunker and Residual Fuel Conference, 17th Annual

LNG | Natural Gas

Estonia-Finland gas link not seen in reverse mode in 2020: official

Feature: US LNG makes negligible impact on European gas market

London — The startup in February this year of US LNG exports based on cheapAmerican shale gas had been expected to see a good proportion of cargoesheading across the Atlantic to Europe given the relatively short shippingroute and Europe's massively underused LNG import capacity.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

But with European gas prices staying stubbornly low for most of the yearand the margins for US LNG having been largely eroded due to the slump inglobal LNG prices, in the end only a handful of cargoes ended up in Europe.

As 2016 nears its end, more than 50 cargoes have left the CheniereEnergy-operated Sabine Pass terminal in the Gulf of Mexico for internationalmarkets.

But of those cargoes, just three landed in mainland Europe -- one inPortugal, one in Spain and one in Italy -- while another two shipments weremade to Turkey.

According to industry sources, the two to the Iberian Peninsula wereconsidered to be "test" cargoes given that they were not followed up by anynew cargoes, while the shipment to Italy was seemingly a one-off as it wasprocured by Uniper to meet its obligations under the country's "peak-shaving"tender program.

Italy's economy ministry holds tenders several times a year for companiesto provide gas that can be used during periods of unexpected peak demand.

Uniper won Italy's latest peak-shaving tender held in October and optedto supply 105,000 cu m of LNG (63 million cu m of gas) from Sabine Pass to bestored "until needed" at the Toscana FSRU off the coast of Livorno. NORTHWEST EUROPE

So the evidence so far suggests that southern Europe has been able toattract some US LNG -- though in limited volume -- but the appeal of US LNG innorthwest Europe has yet to emerge where competition from pipeline suppliersNorway and Russia is fierce.

Gazprom has repeatedly dismissed the economic viability of US LNG inEurope given the current low European gas prices and its own low productioncosts.

Buyers in northwest Europe have reportedly told Cheniere that they do nothave any need for now for US LNG given the abundance of pipeline gas.

The response to US LNG exports starting up from Europe's traditionalpipeline suppliers has been clear -- Russia, Norway and Algeria are allsupplying consistently high volumes to Europe.

Russian exports to Europe and Turkey (minus the countries of the formerSoviet Union) are set to hit an all-time high of 180 Bcm this year, whileNorway's supplies to Europe will come in at around the record of 115 Bcm setin 2015.

Norway has been targeting its sales on the Netherlands and UK, and is nottrying so much to compete with Russia in Germany. Norway's sales to theNetherlands and UK are way up in 2016 compared with the previous year, butslightly down to Germany. ASIA OPENING UP

The majority of cargoes of US LNG shipped in 2016 went to Americanneighbors in Chile, Mexico and Brazil. This was not a surprise -- Cheniereitself conceded that it made sense for the LNG to remain closer to home giventhe narrow margins.

Things have evolved again though since the Sabine Pass plant reopened inlate October after a month of maintenance, as Asian LNG prices jumped sharplyon a surprise lack of supply amid higher demand and several trips atliquefaction plants including Gorgon in Australia.

As a result, a number of cargoes are now headed for Asia to make the mostof the higher spot prices.

Two shipments have been delivered to China so far, while a first cargo isdue to land in South Korea at the weekend.

Eight other US LNG cargoes from Sabine Pass are currently headed for Asiahaving traversed the Panama Canal in mid-December.

Platts assessed the JKM LNG Asian benchmark price at $9.20/MMBtu onThursday.

That is a considerable jump from prices as low as $4/MMBtu in the summerof 2016.

--Stuart Elliott, by Alisdair Bowles,