LNG WRAP: Asian Prices to Rise After Russia-Ukraine Transit Ends

By Bloomberg

Jan 02, 2025

image is BloomburgMedia_SPFQFTT1UM0W00_02-01-2025_15-00-06_638713728000000000.jpg

Tokyo Gas Co. storage tanks at the company's Setagaya facility in Tokyo, Japan, on Monday, Dec. 25, 2023. Tokyo Gas announced this month its subsidiary Tokyo Gas America Ltd. will purchase Rockcliff Energy II LLC for about $2.7 billion in a move to expand its US shale gas operations. Photographer: Toru Hanai/Bloomberg

(Bloomberg) -- The end of Russian natural gas flows to Europe via Ukraine is likely to boost competition with Asia and prices for alternatives.

Ukraine hopes increased supply of gas from the US and other producers to Europe will make prices more comfortable, President Volodymyr Zelenskiy said in a Telegram post on Wednesday. Russia’s invasion of its neighbor in February 2022 sparked an energy crisis in Europe that led to a jump in regional benchmarks and international liquefied natural gas prices.

“This is going to further tighten the LNG market,” Scott Darling, a managing director at Haitong International Securities, said on Bloomberg TV on Thursday. “Supply, particularly for LNG, is tight, and we see more upside risk to spot LNG prices this year and next.”

Gas flows from Russia to Europe via Ukraine halted on Wednesday, bringing to an end more than five decades of the key conduit for the region. While the move was expected after months of political wrangling, Europe will still have to replace about 5% of its gas and may rely more heavily on storage, which has fallen below average levels for the time of year.

Prices rose in anticipation of the cut-off, with Europe’s gas benchmark closing 2024 up more than 50%. Those gains haven’t yet been fully reflected in the cost of the normally more-expensive LNG that nations including Japan and South Korea are heavily reliant on.

More News:

Rupantarita Prakritik Gas Co. is seeking to purchase LNG cargoes for Jan. 30-31 and Feb. 6-7 delivery to Bangladesh

Drivers:

LNG send-out in Europe was at ~3.2 TWh/day on Dec. 31, according to latest available data; +3.9% w/w: GIE data
European gas storage levels were ~72% full on Dec. 31, compared with the five-year seasonal average of 77%
The 30-day moving average of Chinese LNG imports was 236k tons on Dec. 30, up 13.5% from a week earlier, according to ship-tracking data compiled by Bloomberg
Estimated flows to all US export terminals were ~14.5 bcf/day on Jan. 1, down 0.9% w/w: BNEF

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By Sing Yee Ong