A gas market ‘mystery’ floating in the Mediterranean

Bloomberg

A liquefied natural gas tanker plying the waters of the Mediterranean has created a guessing game for energy traders. The Maran Gas Delphi has taken a meandering course after loading up on U.S. shale gas a month ago at Cheniere Energy Inc.’s Sabine Pass export terminal in Louisiana. The ship anchored off the coast of Greece for several days, prompting speculation that it would deliver its supplies to a port in the region. Instead, the tanker is now off the coast of Egypt approaching the Red Sea, raising the prospect that it may instead travel to the Middle East or Southeast Asia.
The winding track of the Maran Gas Delphi is a testament to how a gas glut fed by surging production from countries including the U.S. and Australia is complicating global trade of the fuel. The rise of so-called homeless LNG, or supplies not already committed to customers, is confounding efforts by traders and analysts to get a grasp of the market and make bets.
“It’s a bit of a mystery,” Jason Feer, head of business intelligence at ship broker Poten & Partners in Houston, said of the Maran Gas Delphi. “Normally LNG logistics are pretty well-rehearsed, and having an LNG carrier cooling its heels is expensive.” Cargoes of LNG not committed to customers will peak at 80 million tons by 2020, up from 50 million now, Feer said. This comes as buyers demand more flexible terms and long-term contracts expire amid the global market oversupply, he said.
The Maran Gas Delphi is not the only example of how LNG cargoes are taking a longer or diverted route to find a home. The Stena Clear Sky, also with a cargo from Sabine Pass, spent a month circling South America before unloading on Mexico’s Pacific coast, instead of taking a shorter route via now-opened Panama Canal, which would have saved it about 21 days. More complicated routes highlight how flexible LNG trade is becoming, with more demand for short-term trade to place cargoes in an oversupplied market, said Malcolm Johnson, a Guildford, England-based faculty member of The Oxford Princeton Programme, an energy training provider.