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Europe’s LNG Imports Rebound on Spot Price Premium

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Monthly European LNG imports soared in December as the benchmark Dutch TTF hub price rose to a premium over Asian spot LNG prices, attracting spot LNG volumes to the continent.

Europe received 7 million tons of LNG during the last month of 2021, the highest since March, and up by about 0.8 million tons month on month, according to data from analytics firm Kpler.

Turkey was the top European importer in December with 1.7 million tons, ahead of Spain (1.5 million tons) and the UK (0.95 million tons).

Europe in Pole Position

Limited pipeline supply from Russia and low storage stocks had been pushing up TTF prices during most of December, with the TTF January 2022 contract reaching €180.3 per megawatt hour ($59.7 per million Btu) on Dec. 21, a new record.

As a result of this price surge several vessels that were heading toward Asia had been redirected toward Europe to take advantage of the higher prices.

Skyrocketing European prices also lifted monthly US LNG exports to Europe to an all-time high of 4 million tons in December, data from Kpler showed.

However, the rapid rise in supply has resulted in a steep price fall on the TTF with the January 2022 contract closing at €70.3/MWh ($23.3/million Btu) on Dec. 31.

Supply Security

Measures in some of the largest European LNG-importing countries to mitigate the impact of price volatility has also played a key role in securing more LNG for the continent.

Spanish grid operator Enagas, for instance, offered additional delivery slots at the country's LNG terminals in two extraordinary auctions in September and October last year.

As a result, a total of 136 slots were booked for the winter period (November 2021-March 2022). By comparison, during the November 2020-March 2021 period, 86 LNG cargoes were delivered to Spain.

Meanwhile, the UK turned to a rather surprising supply source in the form of Peru this winter to satisfy demand.

The UK had not received a single cargo from Peru since December 2019, however, in October, November and December 2021, a total of 0.69 million tons of Peruvian LNG was delivered to the country, according to Kpler data.

November and December saw the highest imports from Peru at 0.26 and 0.28 million tons, respectively.

Topics:
LNG Demand, LNG Supply, LNG Spot Trade, LNG Prices, Gas Prices, Gas Demand, Gas Spot Markets, Regasification
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