Spain was top destination for US LNG delivered in May amid strong demand

Spain received more US LNG than any other country in May, tripling the number of American cargoes it imported versus a year earlier, as gas-for-power demand surged, and it seized opportunities to send some volumes to neighboring France, S&P Global Commodity Insights data showed.

As a bloc, Europe, plus Turkey, continued to buy an outsized portion of US LNG, importing almost two-thirds of the US cargoes delivered during last month.

Because demand has ebbed and flowed in recent months across major population centers in Europe, including in Spain, there have at times been more LNG cargoes on the water in the Atlantic than have been needed. Arbitrage opportunities have been limited by weak interbasin spreads, rising shipping costs and, until recently, tepid demand in Asia.

Those dynamics, coupled with uncertainty over the availability of pipeline gas supplies due to Russia's war in Ukraine, have helped spur deep discounts for delivered Northwest Europe LNG versus the inland Dutch TTF gas hub – although, those discounts have narrowed since record levels in mid-May.

Spain received 15 US LNG cargoes in May, versus 11 in April and five in May 2021. France, which was the top destination for US LNG in March and April, was No. 2 in May, with 11 cargoes received. The Netherlands was third, with eight cargoes, followed by the UK, with seven cargoes, and South Korea, with five cargoes. Europe, plus Turkey, received 58 of the 91 US LNG cargoes delivered during last month.

Total gas-for-power demand in Spain was recorded at 39.14 million cu m/d on the May 31 gas day, surging by over 63% on the week and reaching its highest level since April 26, S&P Global data showed. On May 31, LNG import levels into Spanish terminals reached 89 million cu m/d, rising from approximately 40 million cu m/d on the year and hitting their highest level since April 27. The country continues to see strong LNG export opportunities to France, as well as robust gas storage injection demand across Europe.

Amid the supply impact from the war, Europe has been trying to wean itself off Russian gas and increase inventory levels, ahead of the next winter season. Gas in storage was approaching 48% full in the latest reading available June 3, versus 38% at the same time a year earlier. The European Commission wants EU countries to reach 80% capacity for gas storage volume by the beginning of November.

In the Atlantic, Platts DES Northwest Europe, the delivered price of LNG into Northwest Europe, and the Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward were not assessed June 3 due to a London holiday. Platts JKM, the benchmark price for spot-delivered LNG into Northeast Asia, was assessed at $23.543/MMBtu June 3, up 47.5 cents/MMBtu on the day.