China’s state-controlled energy giants are buying and importing the highest volumes of liquefied natural gas since the war in Iran began as the world’s top LNG importer prepares for peak summer demand and heat waves.
Private buyers are also stepping up purchases and China looks to replace the loss of Qatari gas.
Chinese LNG importers are now taking between 7 and 10 cargoes per month to replace Qatar’s deliveries, traders told Bloomberg on Monday.
Part of Qatar’s LNG that was loaded on cargoes before the war began is still trapped behind the Strait of Hormuz, while the Gulf nation halted liquefaction operations at its plants days after the war began.
In addition, the Ras Laffan complex, the world’s single biggest LNG facility, suffered damage from Iranian missile strikes in the middle of March, prompting QatarEnergy to declare force majeure on deliveries and advise that it could take up to five years to complete repairs at the facilities.
Amid the LNG supply crunch from the Middle East and the approaching summer heat in north Asia, China’s 30-day moving average for deliveries has jumped to 178,000 tons per day, the highest since early February, according to Bloomberg’s estimates. Chinese buyers started to purchase more cargoes in the middle of April and have been keeping a high rate of imports since then.
The import volumes are now close to the five-year average for this time of the year, per Bloomberg’s calculations.
This suggests that the gas markets in Asia and Europe will tighten as we move into the summer months amid increased demand for cooling and electricity.
Prices of Asia’s LNG and Europe’s benchmark gas prices have jumped since the Iran war began, as the absence of Qatari supply made competition for alternative cargoes fiercer. Asia has been winning the race to attract LNG cargoes, leaving Europe scrambling for opportunities to refill its gas storage sites, which ended the heating season with stocks at multi-year lows.
By Michael Kern for Oilprice.com
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