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First cargo of US LNG from new Cove Point facility arrives in UK

The first LNG cargo from the newly operational Cove Point terminal on theUS East Coast arrived Wednesday into the UK's Dragon terminal, accordingto S&P Global Platts trade flow software cFlow, only the second cargo ofUS LNG to land in the UK since US shale-gas based LNG exports began inFebruary 2016.

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* Cargo diverted to UK to replenish LNG stocks at Dragon

* NW Europe still not destination of choice for US LNG

* Deliveries could pick up this summer on low stocks

The cargo was delivered aboard the Gemmata, which was diverted from itsoriginal route toward the Pacific basin, and landed in the UK at a timewhen LNG stocks are severely depleted following two periods of extremecold weather.

Despite northwest Europe suffering from the late winter cold blasts, USLNG has still been a rare visitor to the region.

Excluding Wednesday's arrival into Dragon, only two cargoes of US LNGhave landed in northwest Europe -- one in June 2017 to the Gate terminalin the Netherlands and one in July 2017 to the UK's Isle of Grain plant.

It had been expected that the liquid UK and Dutch gas hubs would attractUS LNG given a perception of an oversupplied global LNG market that wouldhave seen US LNG cargoes taken into the NBP and TTF hubs as "markets oflast resort."

However, the LNG market has remained relatively tight, with mostdestination-free US LNG volumes able to find homes either in the morepremium northeast Asian LNG markets or those closer to home in LatinAmerica -- especially Mexico.

Even the delivery of US LNG into Gate last summer was not a signal ofincreased supplies from Sabine Pass to the Netherlands -- in fact theGate delivery was a contractual substitute for supply by Statoil from itsSnohvit plant which was undergoing maintenance at the time.

US LNG supplies into Gate are set to increase, though, after Austria'sOMV in December signed up for a term supply of US LNG from the CheniereEnergy-operated Sabine Pass terminal in the Gulf of Mexico.

EUROPEAN IMPORTS

Elsewhere in Europe, US LNG from Sabine Pass -- which before the start-upof Cove Point was the only LNG export facility in the US lower 48 -- hasfound homes in a number of countries.

Since the first exports in February 2016, Turkey has taken 12 cargoes,Spain 10, Portugal eight, Italy three, Lithuania two, Poland one andMalta one.

US LNG export capacity is set to increase to some 100 Bcm/year by 2020 asother new projects come on stream.

Europe may attract more US LNG this summer as European hub prices areexpected to remain high on significant demand from gas storage sites,which have been heavily drawn down after the cold European winter.

The Dominion Cove Point LNG terminal has a nameplate capacity of 5.25million mt/year, with 20-year export contracts with India's GAIL andJapan's Sumitomo and Tokyo Gas. Most recently, GAIL has been activelyreselling its offtake from both Cove Point and Sabine Pass.

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Jonathan Loades-Carter, newsdesk@spglobal.com