Key information
- U.S. LNG exporters are expected to increase shipments to Europe due to the wide gap between U.S. and European natural gas prices.
- Recent events in Europe, including Austrian company OMV's warning of a potential disruption to Russian gas supplies via pipeline, have contributed to this price surge.
- Natural gas shipments to U.S. LNG export plants are expected to reach their highest level in ten months as European prices continue to rise.
With European natural gas prices having reached their highest level in a year and well above US benchmark prices, there is every reason to believe that US LNG exporters will increase their shipments to Europe. The price difference between the US benchmark Henry Hub and the Dutch TTF Natural Gas Futures, the European benchmark, is currently considerable, with European gas prices around 80 percent higher than their US counterparts.
This significant premium should incentivize LNG exporters to take advantage of the market disparity by sending more cargoes to Europe throughout the winter. Recent events in Europe have contributed to this price surge, including Austrian company OMV's warning of a potential disruption of gas supplies from Russian pipelines and increased demand for heating and electricity. due to the cold.
Volatility of the European natural gas market
Although Gazprom has indeed interrupted supplies to OMV, flows have not yet decreased drastically. However, the European natural gas market remains volatile due to various factors, such as the onset of winter, low wind speeds in northwest Europe, the ongoing dispute between OMV and Gazprom, and the The expiry of Ukraine's gas transit agreement at the end of 2024. Ukraine has announced its intention not to renew this agreement with Russia.
Impact on LNG exporters
As European prices continue to rise, natural gas shipments to U.S. LNG export plants are expected to reach their highest level in ten months. Rising European prices are also leading to a shift in LNG cargo destinations, with cargoes originally intended for Asia or Egypt being redirected to Europe due to the price advantage. Vortexa data indicates at least 11 such shipments were rerouted in the last week alone.
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