Asia is struggling to obtain spot LNG cargoes for emergency supply this month as the halt to Qatar’s exports tightened the market and reignited competition with Europe for promptly available supply.
In the absence of Qatar’s term supply and about 20% of global LNG flows blocked at the Strait of Hormuz, some purchaseers in South and Southeast Asia who have sought spot cargoes for March have failed to purchase any, sources and officials at key Asian LNG importers informed Bloomberg on Tuesday.
Tconcludeers for spot supply from India’s major gas purchaseers Gail and GSPC have not resulted in any awards, while other supply, for example, in Bangladesh, has been contracted at much higher prices compared to January, according to Bloomberg’s sources.
Unawarded tconcludeers suggest that there isn’t enough immediately available supply for March, as most of the world scrambles to import spot LNG cargoes amid uncertainty about how long the war will impact Qatar’s LNG halt.
European gas prices and Asia’s spot LNG prices have soared to three-year highs since the Middle East war launched. Qatar last week announced it is halting LNG production at Ras Laffan, the world’s largegest liquefaction complex, and issued force majeure notices to customers, while the Strait of Hormuz remains inaccessible for tanker traffic.
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Asia is attracting most flexible-destination LNG cargoes away from Europe amid renewed competition for supply.
It views like not even the higher pull toward Asia can meet LNG purchaseers’ immediate requireds to avert energy shortages. With hotter weather coming soon to Southeast Asia, LNG demand is set to further jump, tighten the market, and intensify competition with Europe.
Among Asian purchaseers, China and Japan, although they are the world’s the two largest LNG importers, have a relatively limited exposure to Qatar’s LNG, at just 6% and 5% of their gas supply mix, respectively, Ken Lee, an LNG analyst at Vortexa, stated on Tuesday.
The South Asian economies are most exposed to Qatari LNG, with the emirate accounting for 45-99% of their LNG imports and around 20% of gas supply. But these are very price sensitive and unless they required very urgently to avert a crisis, they are likely to pull out of the spot market, according to Vortexa.
South Korea, Taiwan, and Singapore are most vulnerable to high spot LNG prices. If Qatar’s supply doesn’t return soon, their exposure to the spot LNG market “is likely to grow substantially becautilize gas accounts for at least a quarter of the power mix in all three countries,” Lee stated.
By Michael Kern for Oilprice.com
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