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US and Russian LNG exports to Europe surge in February

The US and Russia saw the greatest year-on-year growth of LNG exports to Europe in February, on the back of higher production and flexible, price-driven supplies, an S&P Global Platts analysis shows.

US exports into Europe, including Turkey, surged 75% on year to 411.5 million cu m, while Russian exports jumped 67% to 1.4 Bcm, ranking as the main exporter.

Growth from the beginning of 2019 was even bigger, at 86% to 2 Bcm for the US and at 70% to 3.1 Bcm for Russia.

In comparison, exports from Norway in February increased by just 20%, while the number of cargoes sent from Qatar, Algeria, Nigeria, Trinidad and Tobago decreased substantially.

There are at least two reasons why Russia and the US have massively pushed their exports into Europe, while the other seven main exporters have not.

First, both countries have increased their capacity substantially in 2018.

Russia added 11 million mt/year of capacity in 2018 at its Yamal LNG facility, while the US increased its capacity by 5.25 million mt/year at Cove Point, according to Platts Analytics.

The second factor is that there is no destination clause in sales contracts from the US, unlike most other LNG exporters, and offtakers can take advantage of arbitrage opportunities between regions.

Russia acted in a similar way, with Novatek and PetroChina offering cargoes on a spot basis to Northwest Europe instead of Asia.

Asian prices have been weak since the beginning of winter 2018 due to mild weather and lower demand for spot LNG cargoes.

The Platts JKM price’s premium to the TTF month-ahead price last year averaged 0.873 cent/MMBtu and 0.457 cent/MMBtu in January and February 2019, respectively, just a fraction of the respective $4.193/MMBtu and $2.794/MMBtu recorded in January and February 2018, according to S&P Global Platts data.
Source: Platts

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