Low flat prices spur East Mediterranean LNG buying interest

Downward pressures on LNG prices was heard to be driving more buying activity in the East Mediterranean, with tensions in the Red Sea pushing buyers to bid higher in order to attract supplementary volumes from elsewhere.

Platts, part of S&P Global Commodity Insights, assessed the East Mediterranean LNG market for March at $7.802/MMBtu on Feb. 12, down 28.6 cents/MMBtu on the day. This put the East Med at the lowest flat price assessed by Platts since the assessment began on Dec. 20.

This put LNG prices in the East Med at a 20 cents/MMBtu premium to prices in Northwest Europe and a 30 cents/MMBtu premium to the West Med LNG market.

At the same time, East Med LNG was at a 32.5 cents/MMBtu discount to the March TTF, the narrowest discount recorded by Platts.

LNG traders said the growing tensions in the Red Sea(opens in a new tab), which are driving shippers to take longer voyages round the Cape of Good Hope, are pushing up prices in the East Mediterranean compared to levels seen elsewhere in Europe and the Med.

"There is demand from Europe for LNG, prices have been strengthening against TTF," an LNG source said. "There is place to provoke demand... There's demand in China, India and Europe too, less volumes from Qatar and lower TTF, demand definitely looks provoked."

While in the West Med, prices were seen at a discount to Northwest Europe, sources suggested that buyers in the East Med are pricing higher in order to attract any additional volumes due to the weaker flows from Qatar.

"Turkish LNG imports reached 1.73 million mt in December 2023, a 10-month high and 8% higher year on year," Kelli Krasity, director at S&P Global, said in a quarterly outlook report. "However, total deliveries in Q4 2023 were 24% lower year on year.

"Turkey's LNG demand could continue to find support from reduced Iranian pipeline imports following a contractual dispute between Botas and the National Iranian Gas Company NIGC," she said. "The dispute between the two state-owned counterparties led to a 97% year-on-year fall in imports from Iran during Q3 2023."

Kelli added that Greek imports in the fourth quarter fell 60% year on year and in January dropped 10% year on year despite the market looking to bring online the Alexandroupolis terminal in the dsecond quarter of 2024.

February imports into the East Med, including Turkey, Croatia and Greece, stand at 790,000 mt as of Feb. 13, around 45% of the levels seen the previous month, according to data from S&P Global.

In comparison, imports into the West Med, including Spain, Portugal and France, stood at 1.4 million mt, around 41% of January levels.

Despite volumes into the East Med being comparably lower, sources see buyers in the region looking to attract more cargoes in order to secure supply for the coming months. Although milder temperatures have been subduing demand as the heating season draws to a close, if temperatures switch in March and April, sources suggest prices could see further support as more LNG is demanded to feed the East Mediterranean heating sector.