The early winter cold snaps prompted Europe to boost its liquefied natural gas imports to a near one-year high in December, with arrivals of American LNG also at their highest since January 2024.
Following two consecutive milder winters, Europe now sees the first proper winter since the 2022 energy crisis and is depleting its natural gas in storage at the fastest pace in seven years.
The end of the Russian pipeline gas flows to Europe via Ukraine has also stoked uneasiness in the European gas market, and buyers have been boosting LNG purchases in recent weeks.
European LNG imports jumped in December to an 11-month high at 10.89 million metric tons, according to data from commodity analysts Kpler cited by Reuters columnist Clyde Russell.
Yet, Europe’s higher LNG imports in December have not been at the expense of Asia, which also boosted imports of the super-chilled fuel last month to the highest in 11 months, per the data compiled by Kpler.
Europe’s December import volumes represented a 23% surge compared to the LNG arrivals in November of 8.86 million tons and were the highest since the 11.18 million tons of imports in January last year, the data showed.
Half of the 10.89 million tons imported in December 2024 came from the United States. Europe’s imports of American LNG are estimated to have also hit an 11-month high at 5.22 million tons.
Since 2022, U.S. LNG has played an increasingly bigger role in meeting part of European gas demand after Russia cut off deliveries to most of its EU customers in the wake of the Russian invasion of Ukraine.
Norway has replaced Russia as Europe’s top pipeline natural gas supplier, while the U.S. has delivered at least half of the LNG that European countries import.
With European inventories depleting fast and now sitting below the five-year average for this point during the winter season, Europe will need to boost overseas supply not only for this winter’s consumption, but also in the spring and summer, to fill up storage sites ahead of the 2025/2026 winter.
U.S. LNG can come to the rescue this year as supply from America is growing with the start-up of Venture Global’s second facility, Plaquemines LNG, in Louisiana, and the commissioning of Cheniere’s Corpus Christi Stage 3 project. Both Plaquemines LNG and Corpus Christi Stage 3 achieved first gas in late December 2024 and are expected to ramp up operations and exports throughout this year.
U.S. LNG exports surged to a new high of 8.5 million metric tons in December, pushing the annual total up by 4.5% compared to 2023, according to LSEG data. Of the total exports in December, 5.84 million tons, or 69%, went to Europe, up from 5.09 million tons in November.
The 2024 total reached 88.3 million tons, which was up from 84.5 million tons a year earlier and cemented the United States’ position as the biggest LNG exporter globally.
U.S. LNG exports are expected to jump by 15% in 2025, reaching almost 14 Bcf/d, thanks to higher export capacity with the Plaquemines LNG and Corpus Christi LNG Stage 3 plants, the EIA said in the Short-Term Energy Outlook (STEO) for December.
Europe’s gas demand this year could be a boon to U.S. LNG exporters as European gas storage will need to be filled to at least 90% of capacity by November 1, 2025, in anticipation of the 2025/2026 winter.
For now, it looks like the recent rally in Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, is giving Europe an advantage in attracting U.S. LNG cargoes.
Spark Commodities assessed the front-month price for February delivery of LNG to northwest Europe at $14.904 per MMBtu as of last week—the highest level since October 2023. This rise in the European price, driven by the TTF rally, has effectively closed the U.S.-northeast Asia arbitrage via the Cape of Good Hope, the commodities analysts said.
“The arb remains strongly closed at -$0.761/MMBtu and continuing to signal that US cargos are incentivised to deliver to NW-Europe instead,” Spark Commodities said.
Despite the fact that the Panama Canal is now becoming a feasible option for LNG cargoes in 2025 with the start of the slot allocation system, the US arbitrage to northeast Asia via the Panama Canal “is similarly firmly closed at -$0.544/MMBtu,” the analysts noted.
Source: By Tsvetana Paraskova from Oilprice.com