The European LNG market in Q3 2015: a (likely temporary) decrease in net imports

European LNG net imports declined by 3.5% year-on-year in Q3LNG Net imports - Q3 2015

Quarterly European LNG net imports declined year-on-year in Q3, for the first time since the beginning of the year. Net imported volumes decreased from 7.2 million tons in Q3 2014 to 6.9 million tons in Q3 2015. While LNG reloads stood lower than a year before at 0.95 million tons (-34.7% year-on-year), gross exports dropped quite significantly from 8.6 million tons to 7.9 million tons (-8.7%).

The decrease in LNG net imports was driven by countries which had boosted Europe’s imports in the first half of 2015, i.e. Belgium, the Netherlands and the United Kingdom. Overall, net imports decreased by 25.1% in these three countries from 3.2 million tons in in Q3 2014 to 2.4 million tons in Q3 2015. The Netherlands were actually net exporters in Q3 with reloads above imports.

Qatar, which used the liquidity of the Northwestern Europe gas market to sell its output at the time of low Asian prices, seems to have somehow pulled back: the country exported only 4.1 million tons of LNG to Europe in Q3 2015 against 4.8 million tons in Q3 2014 (-14.2%). Instead of oversupplying Asia and Europe, where it sold its LNG in a range of $5.4-$6.7/mmbtu on average in July 2015, Qatar (through trading houses) diverted its gas to Latin America, Egypt, Pakistan and Jordan. The latter three, which started operating in 2015, received about 0.8 million tons of LNG from Qatar in Q3.

International Gas Prices – October 2 , 2015

NBP: prices historically low

NBP and coalThe NBP price for September averaged €19.2/MWh ($6.3/MBtu), down 8% compared to September 2014. The markets anticipated that, barring exceptional phenomena (weather or other), next winter’s average prices would be about the same: €19.5/MWh ($6.4/MBtu). For summer 2016, the price is expected to be under €18/MWh ($5.9/MBtu). Several factors account for this situation of prices that are historically low compared to the trends since 2011.

The Global LNG Market in 2015: Q2 First Estimates and Outlook

In the first quarter of 2015, first estimates of global LNG market announced changing dynamics compared to the previous year. Second quarter estimates confirm this trend as the Asian market remains soft with lower demand and increased output in the Pacific Basin. In Europe, Q2 saw net imports grow as gross imports increased and re-exports collapsed. New players such Egypt, Pakistan and Jordan are now integrated in the market while in the United States, Q2 seemed to mark the beginning of the end of the LNG rush. Overall, first outlook for 2015 sees a 2.1% to 2.5% growth year-on-year of the global LNG market to 240-241 million tons.

The Asian market remains soft

In Q1 2015, following the collapse of oil prices and under the influence of softening market conditions, LNG average import prices declined significantly in Asia. In Japan, prices plummeted by 19.4% from January to March and in South Korea, prices fell by 8.4% over the same period.

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