The dozens ships carrying liquefied natural gas (LNG) that
have anchored off Spain’s Bay of Cadiz are often there not because they cannot
find anywhere to offload their cargo, but because they anticipate getting more
for their cargo if they wait until December, several industry sources have
claimed.
It has been reported that the ships going round in
circles off the Iberian coast and in the Mediterranean, burning fuel, had been
unable to secure slots to unload their LNG cargoes. This was because the plants
that convert the superchilled fuel back to gas that can be used by industry, offices
and homes were operating at maximum capacity.
While it was an undeniable fact that Europe has two
significant problems – a lack of regasification capacity, and a lack of
infrastructure that can move the restored gas from one country to another –
just as the continent stocks up for a winter of substantially less Russian
pipeline gas, it has been claimed that some of the waiting ships are part of a
trading strategy from their respective companies, anticipating higher prices.
Reuters and Bloomberg have reported
anonymous sources within the sector stating that the cargo carriers were “waiting
for higher prices. If one single idling vessel discharges its cargo, the price
will immediately collapse by affecting the other cargoes on the queue and this
domino effect is so painful in terms of opportunity cost,” one of the sources
said.
Rystad Energy has noted that European natural gas prices were
currently at their lowest since June, dropping 28% in a week, partly due to
high inventory levels and above-normal temperatures. Samuel Good, head of LNG
pricing at commodity pricing agency Argus, said that “for those floating
storage cargoes sold on a DES (delivery ex ship) basis, we’re expecting most of
these to be delivered in early November, though some firms may push deliveries
yet further into winter”.
By the middle of this week there were nine vessels
anchored off Cadiz, three of them belonging to Spain’s Naturgy: Castillo De
Caldelas, Rioja Knutsen and Iberia Knutsen, two industry sources said.
One of the other ships belongs to BP, while three belong to
commodity trader Trafigura and one to US Cheniere. The last one was empty. Vessels
are sometimes subleased by other companies.
A Naturgy spokesperson said that its ships have assigned
discharge slots in Spain and are waiting for those dates to unload.
Toby Copson, global head of trading and advisory at
Trident LNG, said that cargoes were unlikely to be redirected to Asia because
freight costs were rising and prices there remained lower than in Europe.
Meanwhile, some tankers that had been waiting in the
Mediterranean since September recently began moving again, heading for Northwest
Europe and UK terminals, according to data intelligence firm ICIS.
