European LNG reload activity set to pick up

LONDON (ICIS)–There is still a prospect that northwest European LNG terminals could witness more reload activity in the coming weeks, with the arbitrage window between Asia and Europe continuing to incentive market interest in re-exports.

The spread between the ICIS East Asia Index (EAX) and the front month NBP price stood at $3.61/MMBtu on Wednesday, widening from just over $2.50/MMBtu at the beginning of June and just over $1.00/MMBtu in mid-May.

The window for reloads has been fuelled by strong Chinese demand, and the last time the arbitrage climbed above $3.50/MMBtu in January there was a flurry of activity with nine cargoes reloaded from European terminals, including six from France and two from Britain.

The Netherlands’ Gate and France’s Montoir terminals have already witnessed reload or transfer activity in June, and according to LNG Edge, the ballast 173,000 cubic metre (cbm) Stena Crystal Sky is heading to the Gate terminal from Japan where is scheduled arrive on 3 July.

According to market sources, price discussions to reload LNG in Spain for July and August is currently around $9.00/MMBtu, with prices for northwest European terminals at similar levels.

Aside from Gate, reloads from Britain’s Isle of Grain and Belgium’s Zeebrugge terminals remain a possibility.

Grain executed two reloads in January, and four arrivals at the terminal over the course of June have bolstered inventory levels. The tanks at the terminal were nearly 85% full on 21 June, holding 866,460cbm of LNG, National Grid data shows.

Send-out from the site has averaged 29.5GWh/day in June and the Interconnector shutdown is likely to limit any increase in flows into the grid for another week.

Market sources have also indicated that Zeebugge could host at least one reload. Inventory levels at the Belgian terminal are comparatively lower than at Grain, but two vessels are scheduled to deliver Qatari-sourced volumes to the terminal over the next two weeks, which would provide ample LNG to execute a reload.

The Q-Flex Al Shamal will arrive on 27 June, with the 173,000cbm Flex Endeavour expected to arrive on 5 July, according to port authority data.