LNG Tankers Re-Route To Europe From Asia After Russia Stops Gas Supply To Austria’s OMV

Several LNG tankers are being rerouted from Asia to Europe due to a sharp increase in gas prices after Russia’s sudden decision to stop gas supplies to Austria’s OMV, an oil and gas company, according to new data from analytics firm Kpler.

Gazprom, Russia’s state-run energy giant, stopped deliveries to OMV on November 16 after the Austrian energy company threatened to seize Russian gas as compensation for a favourable arbitration decision in a contract dispute.

Gas prices increased at the Dutch TTF hub, one of Europe’s main gas markets, after Gazprom informed OMV of its decision to cut off supply on November 15, 2024.

The price of gas in Europe jumped to €46 per megawatt hour ($14.49 per MMBtu) on November 18, the highest since November 2023.

Per the LSEG data, the Japan Korea Marker (JKM), the Asian benchmark, was priced at about $14/MMBtu at the same time.

According to Laura Page, Manager of Gas and LNG Insight at Kpler, one of the main reasons for the vessels’ diversion was the change in the market price gap.

Page said that traders changed their course and sent LNG to Europe, where prices are higher after the JKM-TTF spread flipped into negative territory last week due to concerns about the Russian gas supply and cold weather forecasts.

The LNG tankers have changed their course and headed to European ports after a price spike in Europe. The tanker Vivert City, registered in Liberia, was originally destined for Bangladesh and is now en route to the UK’s South Hook terminal after loading its cargo at Equatorial Guinea.

Another tanker, Gaslog Windsor, registered in Bermuda, was transporting U.S. LNG from Sabine Pass to China, and it was rerouted on Friday. The vessel is now en route to the Isle of Grain terminal in Britain.

On the other hand, the tanker BW Lesmes, registered in Singapore and originally destined for China to deliver its Nigerian LNG, also changed its course to the Isle of Grain terminal.

The tanker Diamond Gas Crystal, registered in Singapore and originally bound for South Korea, is now rerouting toward the Dutch Gate Terminal.

Additionally, the Flex Vigilant tanker, registered in the Marshall Islands, initially bound to unload in China, is awaiting further orders in European waters.

Alex Froley, senior LNG analyst at ICIS, says that one of the reasons for the rerouting of cargoes to the UK is the availability of unloading slots.

While several major terminals in continental Europe are running at full capacity, the UK’s facility, especially the South Hook and Isle of Grain terminals, offered more space for these redirected LNG tankers.

In a time when markets were shifting, the availability of slots made the UK a convenient alternative for traders.

Russian gas deliveries to Europe through Ukraine remain uninterrupted despite the rerouting of LNG cargoes. Gazprom reported that gas transit through Ukraine, which is still the main pipeline route for Russian gas entering the EU, is stable.

Ukraine has already said it will not extend its gas transit agreement with Russia once the current five-year deal expires at the end of this year.

Europe increasingly relies on LNG imports to fill the gap left by disrupted Russian gas flows.

Reference: Reuters