US LNG cargo oversupply to Europe mounted in August, trade-flow data shows

Nearly 60% of US LNG cargoes delivered in August landed in Europe as the Continent filled up storage to prepare for peak winter demand amid ongoing reductions in Russian pipeline gas, an S&P Global Commodity Insights analysis showed.

That trend could continue, with the Nord Stream gas pipeline from Russia to Germany offline indefinitely due to what Moscow said Sept. 2 was an oil leak detected in a turbine during scheduled maintenance.

The volume of LNG cargoes heading to Europe in recent months has, at times, been more than importing countries needed, resulting in a mismatch that has caused prices for waterborne LNG to further decouple from inland gas. Platts DES Northwest Europe for October was assessed Sept. 2 at a $19.05/MMBtu discount to the Dutch TTF hub front-month price.

"You could barely trade October at the moment unless Asia starts buying a lot and TTF-JKM closes," said an Atlantic-based LNG trader. "It's hard enough trading two weeks ahead at the moment. People will hold off buying winter as long as they can."

In August, France was the top destination of US LNG for the second month in a row, receiving 15 cargoes, followed by Spain with 10 cargoes, South Korea and the Netherlands each with eight, and Japan, Taiwan, Greece, and Argentina each with four, S&P Global data showed. Some 48 of the 84 US LNG cargoes that were delivered in August landed in Europe.

With Russian gas supplies sharply reduced, Europe has been snapping up US LNG cargoes in recent months to help bolster its inventories ahead of winter. The continent recently reached its storage target early, temporarily easing fears about a winter gas supply crunch. The Sept. 2 disclosure by Russia's Gazprom about Nord Stream, however, changed the supply outlook.

Gazprom suspended gas flows through Nord Stream Aug. 31 as scheduled for three days of maintenance work on the last operational turbine at Portovaya. Nord Stream was scheduled to resume operations early Sept. 3, according to initial nomination data published on the Nord Stream website Sept. 2. After the London market close Sept. 2, however, Gazprom said the pipeline would not resume operations. Moscow has repeatedly blamed Western sanctions—imposed because of Russia's invasion of Ukraine—for an inability to properly maintain turbines at Portovaya. Gazprom announced the work Aug. 19, saying that Nord Stream supplies would resume at 33 million cu m/d, 20% of its total capacity, once the necessary work on the turbine was completed.

The Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed Sept. 2 at $41.25/MMBtu, down $11.55 on the day. GCM's current level was still more than two times higher than at the same time a year ago.

On the Panama Canal Sept. 2, the maximum wait for unreserved LNG tankers transiting the shortest passageway from the US Gulf Coast to East Asia stood at four days northbound and 10 days southbound, according to the Panama Canal Authority.