Cargoes carrying liquefied natural gas (LNG) have been diverted from Asia to Europe in the past few days, Reuters quoted data from analytics firm Kpler on Monday.
According to the report, at least five cargoes of LNG have been diverted to Europe after Russia halted gas supplies to Austria’s OMV.
On Saturday, Russia’s Gazprom halted supplies to the top Austrian gas importer OMV. The move came after OMV had threatened to impound some of Russian gas.
The European gas market is in turmoil after an arbitration court awarded OMV a large sum in compensation in a dispute with its Russian supplier. The former wants to offset the claim immediately.
Barbara Lambrecht, commodity analyst at Commerzbank AG, said:
According to media reports, the next payment date for gas deliveries is 20 November; however, there are concerns that deliveries may be interrupted before then.
European gas prices surge
Gazprom had notified OMV about the planned halt on Friday, which led to a spike in natural gas prices.
This made it more profitable for suppliers to divert gas to Europe rather than to Asia.
Dutch TTF gas prices surged to 46.65 euros per megawatt hour on Monday, its highest level since October 2023.
“The JKM-TTF spread flipped into negative territory last week amid Russian pipeline gas supply concerns and an upcoming cold spell, which saw traders divert LNG cargoes away from Asia and towards Europe,” Laura Page, manager of gas and LNG insight at Kpler, told Reuters.
Several tankers divert to Europe
According to Kpler data, the Vivert City LNG tanker, which was heading to Bangladesh has now been diverted to Britain’s South Hook terminal.
The tanker was loaded from Equatorial Guinea and was diverted on Friday.
Gaslog Windsor tanker also diverted to Britain’s Isle of Grain terminal on Friday. It was loaded with US LNG from Sabine Pass, and was initially headed for China, Reuters said in its report.
Additionally, BW Lesmes tanker, loaded in Nigeria, was also diverted towards the Isle of Grain terminal. The tanker was also headed for China.
Reuters quoted, senior LNG analyst at data intelligence firm ICIS, Alex Froley:
One of the main reasons ships are switching to the UK, though, is likely that the UK’s terminals weren’t so busy as some of the main Continental terminals, meaning there were more spare unloading slots for traders to access when they decided to divert Asian cargoes to Europe.
Meanwhile, the Diamond Gas Crystal tanker was also diverted to the Dutch Gate terminal from South Korea, according to the report.
No threat of supply bottlenecks
According to Eurostat, Austria only accounted for a good 3% of total EU gas imports in 2023.
Commerzbank said that although the share of Russian supplies was over 80% of Austrian gas imports in recent months, it was sharply lower in 2023.
Additionally, the expiration of the transit agreement with Ukraine threatened to cut off gas supplies anyway.
“Since the storage tanks in Austria are over 90% full, there is no threat of supply bottlenecks in the short term,” Commerzbank Lambrecht said.
Furthermore, according to the head of the Austrian energy company, there is no longer any dependence on the Russian gas supplier, as alternative sources have been found.
Lambrecht noted:
Nevertheless, it cannot be denied that this makes the situation even more tense in an already nervous market environment.
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