Europe has seen a rapid increase in Liquefied Natural Gas (LNG) imports in recent weeks owing to vast inflows of Qatari LNG tankers to the continent.
Qatar is the world’s largest producer of LNG while Asia is the world’s biggest and highest-paying LNG market. As Asia remains a major source of revenue for major LNG producers including Qatar, the decline in revenues resulting from spot price drops in Asia has prompted Qatar to face west.
Qatar’s diversion of prompt LNG cargoes from Asia to Europe has allowed some Far East buyers to cover short positions in the past week, causing a slight rise in price of Asian spot LNG. Last week saw a minor bounce back of Asian spot prices from a year lows of $15.50 per million British thermal units (mmBtu) to $15.70 per mmBtu for May delivery.
“Prices have fallen a lot over the past month and this steadying could be down to a couple of buyers covering shorts,” said a trader.
On the other side of the world however (in Europe) gas prices are trading at multi-year lows in reaction to high stored reserves, excess pipeline supply and a mild winter. Yet five Qatari tankers are due to unload at British and Belgium terminals alone in the next two weeks while another is currently discharging at South Hook terminal in Britain.
Analysts have suggested that Qatar diverts supply away from Asia when price falls in order to avert additional losses. However, it does this even though the alternative LNG markets (Europe in this case), offer insufficient economic reason to justify diversion from Asia.
