As European Natural Gas Prices Surge... US LNG Ships Headed to Asia Change Course to Europe

Australian LNG Tankers Head to Europe for the First Time Since 2009

[Photo by Reuters-Yonhap News]

[Asia Economy Reporter Park Byung-hee] As Russia restricts natural gas supplies, causing European natural gas prices to soar, U.S. liquefied natural gas (LNG) tankers originally headed for Asia are turning toward Europe. Due to the decrease in natural gas supply to Asia, natural gas prices in the Asian region are also expected to rise.

According to major foreign media on the 22nd (local time), an LNG tanker that departed from Sabine, Texas, traveled across the Atlantic Ocean, the Mediterranean Sea, and the Suez Canal to the Indian Ocean, then around the 15th turned back toward the Suez Canal. Instead of arriving at the originally planned destination in Asia, the LNG was carried directly to the European market. With European natural gas prices skyrocketing, it is more profitable to sell in Europe without traveling all the way to Asia.

According to commodity information provider Platts, the price gap between European and Asian natural gas has widened to an all-time high. Currently, the European LNG spot price is about $48.5 per MMBtu (million British thermal units), while the Asian spot price is only $41 per MMBtu. In October and November, Asian natural gas prices were on average about $5 per MMBtu higher than European prices, but since then, the prices have reversed, and the gap has widened to about $7.5.

Last week, another U.S. LNG tanker changed course near the Strait of Malacca. An Australian LNG tanker also headed to Europe after unloading only part of its cargo in China. This LNG tanker is scheduled to arrive in Barcelona, Spain, on Christmas Eve.

Alex Froley, an analyst at consulting firm ICIS, explained that it is the first time since 2009 that an Australian LNG tanker has gone to Europe. He said, "With European natural gas spot prices soaring, some tankers are making the rare decision to change their destinations." There are also forecasts that 15 to 20 tankers will change destinations this month.

European natural gas prices have surged this week as Russia halted operations of the Yamal-Europe pipeline, one of the main routes for exporting natural gas to Europe. The Yamal-Europe pipeline connects Belarus and Poland to Germany. Russia completely stopped natural gas exports through the Yamal-Europe pipeline starting on the 21st.

The natural gas futures price at the Dutch TTF exchange, the benchmark for European natural gas prices, surged 23% on the 21st, breaking through 180 euros per megawatt-hour (MWh) for the first time ever.

Russian state-owned gas company Gazprom did not participate in the auction for Yamal-Europe pipeline transport volumes for the next day (the 23rd) on the 22nd, so natural gas transport through the Yamal-Europe pipeline is not expected to occur on the 23rd either.

Russia is reportedly still operating other supply routes to Europe, including the pipeline through Ukraine and the Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany.

This content was produced with the assistance of AI translation services.