European LNG deliveries rise, free on board reload on offer

20 March 2015 | Ranjana Kaushal, LNG Markets Reporter, Europe and India

The LNG terminals in Netherlands and Belgium are expected to receive more contractual deliveries over the next one month compared with the same period last year as demand for spot LNG from Asia and South America continues to remain weak and volumes from new supply sources adds liquidity to the global markets.

The 12 billion cubic metre (bcm)/year Gate LNG terminal in Rotterdam could receive at least one more term delivery by mid-April, a capacity holder said. The terminal received Qatari volumes on board the 210,000 cubic metre (cbm) Al Khattiya on 19 March.

Capacity holder and German utility E.ON is understood to have received the volumes as a part of a mid-term deal with Qatargas. E.ON and Qatargas signed a medium-term contract for supplies into Gate in 2013.

The contract is priced on a continental gas hub basis and runs for five years. Supplies from the contract began last year and E.ON can receive up to 10bcm over the term.

“Last year E.ON was not keen to receive volumes from the contract at the terminal but this year it will receive more Qatari volumes at Gate,” an Atlantic basin trader said.
As deliveries at Gate increase, the capacity holders are offering FOB (free on board) reload volumes from the terminal.

“A couple of reloads may be on offer from the terminal over the next one month,” a capacity holder said. The offer price of the reload for March-end and early April is understood to be upwards of $7.50/MMBtu.

“Buyers are looking at offer prices anywhere at $7.50/MMBtu for a late April delivery into the Pacific basin,” a buyer active in the market said.

“Sellers don’t want to hold excess volumes anywhere as systems are well-supplied with piped gas,” another buyer said.

Gate has received four deliveries so far this year and performed one reload operation on the Glencore-controlled 160,000cbm Corcovado in February.

The terminal received only two cargoes over the same period last year, according to ICIS data.

Long-term deliveries at Zeebrugge LNG terminal are also expected to increase. The terminal has received four deliveries until 18 March and is expected to receive another two by the end of the month.

Last year, only three deliveries were received at the terminal in March.

“Capacity holders prefer to bring in long-term volumes and wait for the right opportunity to reload but they can’t wait very long,” a trader said.

Italian Eni, which holds capacity at Zeebrugge, may provide reload volumes to Argentina towards its latest tender.

The results of the tender are pending but Eni is heard to have offered competitive bids and was expected to have secured the award for one cargo, market participants said.

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