BAKU, Azerbaijan, Jan.14
By Leman Zeynalova – Trend:
After the minor decrease (3 percent) registered in Q2 2020, LNG imports in the EU fell by 15 percent in Q3 2020 year-on-year, Trend reports citing the European Commission.
“Looking at the three months of the quarter, EU LNG imports were respectively down by 4 percent in July, by 18 percent in August and by 13 percent in September 2020, in year-on-year comparison. This clearly reflects the impact of cancellation of LNG shipments during summer 2020, which was particularly intensive in the period of June-August 2020, and it especially concerned cargos from the US,” reads the European Commission’s report.
The quarterly LNG import in Q3 2020 was 18.5 bcm, decreasing from 21.7 bcm in Q3 2019, said the report.
“The total number of LNG cargoes arrived in the EU went down from 283 to 235 between the third quarters of 2019 and 2020. With the exception of Poland, LNG imports decreased in all major EU importer countries, and only in Sweden and Finland, both importing minor volumes, could we see an increase in Q3 2020 year-on-year.”
The report shows that over the last one-two years, gas hub prices in Europe remained aligned with their East Asian peers. “In Q3 2020 LNG price premium of the Asian markets reappeared which also might have impacted LNG imports in Europe. However, the Asian price premium did not seem to be sufficiently big in Q3 2020 that it could measurably result in cargo redirection from Europe towards Asia. Europe has a good geographical position, offering proximity to cargos from the Atlantic Basin, the Middle East and LNG of Russian origin (production at the Yamal Peninsula), resulting in favourable shipment costs.”
In the third quarter of 2020, Qatar became the largest LNG supplier to the EU, having a share of 29 percent of all LNG imports (7 percentage points up compared to Q2 2020). Russia was the second LNG import source for the EU, with a share of 16 percent in Q3 2020 (down from 18% in Q2 2020). Nigeria was the third biggest import source in Q3 2020, (with a market share of 15%), followed by Algeria (13 percent).
The United States was only the fifth LNG supplier in Q3 2020 for the EU, ensuring only 12 percent of the total imports, significantly down from 23 percent in Q2 2020. This clearly reflect the impact of LNG cargo cancellations, especially those of US origin, implying that European customers have more flexible conditions in their LNG contracts with US suppliers than with other countries (shorter duration of contracts, less take or pay type of provisions, etc.). Following the sudden fall in gas demand in Q2 2020 the most flexible way for European customers to accommodate supply to lower demand was to cancel shipments from the US. In Q3 2020 Norway had a share of 7 percent in total EU LNG imports, whereas Trinidad and Tobago ensured 5 percent of imports.
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