LNG Bunker Snapshot: Rotterdam's price surges more than Singapore's

Rotterdam’s LNG bunker price has surged amid rising delivery costs, while Singapore’s price has remained steady.

PHOTO: Bunkering of CMA CGM's LNG-powered vessel in the Port of Rotterdam. CMA CGM

Changes in weekly LNG bunker prices:

• Rotterdam up by $64/mt to $772/mt
• Singapore up by $2/mt to $783/mt

Rotterdam

Rotterdam's LNG bunker price has gained by $64/mt in the past week. Part of this rise has come from a sharp rise in the underlying Dutch TTF Natural Gas contract.

LNG bunker delivery costs also went up, with an additional $18/mt added last week, bringing the delivery cost to $117/mt. This has added upward price pressure on the LNG bunker price in Rotterdam.

Tensions in Eastern Europe have contributed to supply concerns. A recent Ukrainian military operation in Russia's Sudzha and Korenevsky regions disrupted Russian gas flows, potentially impacting the ongoing negotiations between Azerbaijan, Ukraine, and the EU regarding the future of Russian gas flows through Ukraine.

Although Ukraine's gas transit accounts for only a small portion of Europe's overall imports, countries such as Austria and Slovakia still heavily rely on these flows, according to Rystad Energy.

Europe's gas-for-power demand rose by 3% last week, spurred by unusually high temperatures. Rystad analysts expect the heatwave, particularly in Italy, to persist until the end of August, which could further increase LNG demand for cooling.

Moreover, maintenance work at France's Montoir-de-Bretagne regasification terminal has been extended, potentially limiting LNG supply in the short term.

European gas storage is currently more than 86% full, much higher than the five-year average of 78%. However, the pace of refilling these reserves has been slower when compared on a year-on-year basis. As a result, current storage levels are slightly lower than they were at this time last year, when they stood at 87% full, according to ING's Head of Commodity Research, Warren Patterson.

Singapore

Singapore’s LNG bunker price has inched up by just $2/mt. The Japan/Korea Marker (JKM) price saw a slight uptick last week.

This small increase has narrowed Singapore's LNG bunker price premium over Rotterdam's to just $11/mt.

Gas demand in Singapore and other East Asian countries remains strong due to the increased need for electricity during the ongoing heatwave. Higher temperatures lead to increased use of air conditioning, which in turn drives up electricity demand and, therefore, gas demand.

Japan, for instance, is expected to experience higher-than-normal temperatures throughout August. Similar conditions are anticipated in South Korea and parts of eastern China, where temperatures will likely remain above average for the rest of the month, according to Rystad Energy.

In Japan and South Korea, the power generation sector constitutes a significant portion of total gas demand—59% and 43%, respectively.

By Debarati Bhattacharjee

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