DES Northwest Europe LNG assessed at record $17.05/MMBtu discount to TTF hub

The delivered price of LNG into Northwest Europe was assessed July 27 at a record discount of $17.05/MMBtu to the Dutch TTF hub front-month price, based on market intelligence.

The further decoupling of European LNG versus inland European gas comes amid a mismatch of where supply is coming into the continent and where it is most in demand.

At current discount levels, if you had a cargo going to a French terminal, for instance, it would almost be better to send the cargo to Asia, an Atlantic-based trader said.

"The prompt seems pretty weak in Asia, but possibly some demand over winter," the trader said.

The higher the prices go, the harder it is to trade LNG in the Atlantic, resulting in thin liquidity and heightened volatility, a second trader said.

"It is also hard finding people who can even afford these cargoes," the second trader said. "The market is finding it hard to function properly. Logistical issues given that gas demand is in Germany, while the LNG is arriving in the UK and France."

Platts DES Northwest Europe for September was assessed at $44.116/MMBtu July 27, down $6.70/MMBtu on the day. The September TTF contract was assessed at $61.166/MMBtu, up $1.40/MMBtu on the day. NWE's $17.05/MMBtu discount to TTF exceeded the previous record discount of $12.25/MMBtu set on July 20.

Demand for gas is concentrated in Germany and Eastern Europe because they are the areas most affected by the cut in flows from Nord Stream One to just 20% of capacity. Meanwhile, LNG cargoes are largely arriving in Western Europe, with the network unable to send that regasified LNG eastwards to compensate for the tight supply.

"It's clear that demand for LNG is pretty low," the second trader said.

Market sources also said that there was widening variation geographically for LNG prices in Northwest Europe. This is due to both decoupling of pricing between European hubs such as France's PEG and and Britain's NBP, and differing levels of liquidity causing the cost of hedging to differ.

"Cannot say that there is one NWE price for LNG as it varies from hub to hub," the second Atlantic trader said.