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US LNG cargo sets sail for Dutch Gate terminal, first delivery to NWE

London β€” * Statoil's Arctic Discoverer expected into Gate on June 7
* Seen as a replacement cargo during Snohvit maintenance
* Not necessarily sign of wave of US LNG coming to Europe

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The Gate LNG import terminal in the Netherlands is set to receive Northwest Europe's first ever cargo of US LNG, with the Statoil-chartered Arctic Discoverer expected to arrive into Gate in early June, according to Platts Analytics.

US LNG exports began in February last year but to date no cargoes have landed in the liquid hubs of Northwest Europe, faced with competition from domestic supply and cheap imports from Norway and Russia.

The Arctic Discoverer set sail Sunday from the Sabine Pass LNG export plant in the Gulf of Mexico and is expected into Gate on June 7.

According to traders, the delivery is likely a replacement cargo for Statoil given that its Norwegian Snohvit LNG facility is down for maintenance from May 12 to June 18.

"This is linked to Snohvit maintenance as Statoil has a delivery obligation into Gate," an LNG trader said.

Statoil could not be reached for immediate comment Monday, while the Gate terminal declined to comment on specific ship movements.

In addition, the first cargo being shipped into Northwest Europe is expected to arrive just a week before annual maintenance on the UK-Belgium Interconnector shuts off supplies from the UK to the continent for two weeks.

Therefore, it is not necessarily a sign of the start of a wave of LNG flows from Sabine Pass to Northwest Europe, with other LNG producers likely to remain competitive for supply into the region.

Nonetheless, it remains a landmark delivery and comes as Russia and Norway continue to supply gas at record high levels to Europe.

Gazprom exports to Europe and Turkey were up 14% year on year at 73.6 Bcm in the period January-mid-May after a strong start to 2017.

Analysts had doubted whether US LNG would find a home in Northwest Europe in the short term given the competition from traditional suppliers, but it was expected that, as the global LNG market became increasingly oversupplied, cargoes of US LNG would eventually come to Europe given its role as market of last resort.

Another US LNG cargo is expected to be supplied to Poland later in June under a deal signed between Sabine Pass operator Cheniere Energy and Poland's PGNiG in May.

The agreement was hailed by the Polish government as another step towards gas independence from Russia, giving the deal a more geopolitical angle.


Since exports of US LNG from Sabine Pass began, a number of cargoes have landed in southern Europe, with Spain taking four cargoes, Portugal three and Italy one.

The cargoes to Spain and Portugal mostly came during a spike in prices in southwestern Europe caused by a cold snap in January 2017 and some market tightness.

Many observers -- and Cheniere itself -- had expected much of the first wave of US LNG to go to Europe, but of the more than 100 cargoes exported so far, the majority have been delivered closer to home, with Mexico taking around a quarter of the cargoes, according to Platts Analytics.

Chile, Argentina and Brazil have also taken around 25 cargoes between them.

Northeast Asian markets have been importing regularly since the turn of the year, with Japan and China leading the way, with nine cargoes each, and South Korea buying six cargoes.

Other main buyers of US LNG include Jordan (8), India (7), Turkey (6) and Kuwait (6).

The wide distribution of cargoes is explained by the market strategies employed by the three companies that have had offtake rights at Sabine Pass LNG over the past year.

Cheniere holds liquefaction capacity at the operational Sabine Pass trains and also has the rights to cargoes produced during the commissioning of each train.

It does not currently have any active delivery contracts to honor, and has been allocating its cargoes based on the best available spot pricing, regardless of the destination.

Shell, meanwhile, holds the largest offtake contract at Sabine Pass LNG, with 3.5 million mt/year from Train 1 and another 2 million mt/year across Trains 2-4.

The company has been folding volumes from the US into its global portfolio of long-term contracts, but has also been using them to fill spot demand in the form of tender and bilateral agreements.

Many of its US cargoes have been loaded onto Shell-controlled vessels and have gone to locations where the company has long-term contracts in place, including Chile, China, Japan, Jordan and South Korea.

The remaining cargoes have been used to fill spot tenders in countries like Argentina, Kuwait and Mexico, or for bilateral deals into countries like Spain and Turkey.

The most recent contract offtaker from Sabine Pass LNG has been Gas Natural Fenosa, which has the liquefaction rights to 3.5 million mt/year from Train 2.

--Stuart Elliott,
--Luke Stobbart,
--Edited by James Leech,