A milder-than-normal winter in China, Japan, and South Korea as well as narrowing price gaps between European and Asian spot natural gas prices lead to a boost in the US LNG Exports to Europe, according to the US Energy Information Administration (EIA).
Europe’s imported an average of 10.2 Bcfd of LNG in the winter of 2018–19, rising 60% from the previous two winters and the highest winter average since 2013, CEDIGAZ LNG data showed. In the first five months of 2019, around 40% of US LNG exports were delivered to Europe. In January, US LNG exports to Europe exceeded shipments to Asia for the first time.
On the other hand, LNG exports to Asia, especially China, Japan, and South Korea started to decline in February 2019 amid warmer-than-usual winter. Japan also decreased its imports of LNG for its power sector as the country began restarting its nuclear power plants. Despite the decrease, China remains the world’s top LNG importer. Demand from the country is expected to increase as it expands LNG import capacity and replaces coal-fired power plants with ones using LNG.
In April, the spread between Japan spot LNG and UK NBP/Dutch TTF prices has fallen to as low as $0.60/MMBtu from $1.00/MMBtu in January. The drops in the price spread between European pricing benchmarks and Asian spot LNG spot prices have provided an incentive for US LNG exporters to divert flexible US LNG cargoes to Europe. Besides, it is cheaper to ship LNG to Europe than to Asia.
