Shipping costs make Europe a LNG hot spot

Bloomberg

Forget Asian hunger for energy or where liquefied natural gas (LNG) costs the most, at the moment it’s all about tanker rates.
Northwest Europe has seen a boom in LNG imports this month, with cargoes arriving from atypical sources including Peru and Egypt, while the US and Russia are also sending tankers into the most liquid gas market outside of North America. That’s come as shipping rates have climbed to near records while the premium Asia pays for fuel has barely changed.
“We focus on the commodity price, but that spread has closed, and because the shipping rates are up, the spread is even lower,” said Jean-Christian Heintz, founder and director of adviser Wideangle LNG in Lugano, Switzerland. “All eyes are on shipping optimisation. Shipping optimisation becomes even more important than commodity price.”
“It is at best only a marginal call as to whether to reload gas from European LNG terminals and send it to Asia or keep it in Europe,” Energy Aspects said in a note.
With shipping rates near $150,000 a day, meeting a 10-day voyage requirement in the market would earn about $1.5 million.
“If I am a BP or Shell and I have a large fleet, I will try to have my fleet less busy and deliver more locally so I can free up one of my vessels for sub-chartering for longer voyages,” Heintz said.