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1、 February 2024 OIES PAPER:NG 188 LNG Shipping Chokepoints:The Impact of Red Sea and Panama Canal Disruption Jack Sharples,Senior Research Fellow,OIES i The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studie

2、s or any of its Members.The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members.Copyright 2024 Oxford Institute for Energy Studies(Registered Charity,No.286084)This publication may be

3、reproduced in part for educational or non-profit purposes without special permission from the copyright holder,provided acknowledgment of the source is made.No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the O

4、xford Institute for Energy Studies.ISBN 978-1-78467-231-7 ii The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Acknowledgements I would like to thank my colleagues at the OIES fo

5、r their feedback during the drafting of this paper,in particular,Mike Fulwood,James Henderson,and Bill Farren-Price.I would also like to thank Kate Teasdale,Harvey Grazebrook,and Bill Farren-Price for their help in preparing the paper for publication.I would also like to thank those companies who pr

6、ovide OIES with access to both data and publications pertaining to the global LNG market,which have contributed to the development of this paper:S&P Global,Argus,Kpler,and GIIGNL.Your continuing support is much appreciated.iii The contents of this paper are the authors sole responsibility.They do no

7、t necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Executive Summary Due to droughts and restrictions on vessel transits at the Panama Canal,the volume of LNG shipped via the Panama Canal declined by two-thirds between August 2023 and January 2024,and

8、could fall to zero in February.As a result of Houthi attacks on vessels in the Red Sea,no LNG cargoes have traversed the Red Sea since 12 January 2024.This paper analyses the impact of curtailments in LNG shipping via these chokepoints in terms of the exporters affected and the impact on the global

9、LNG market,and European LNG imports in particular.The key points of this paper are:In 2023,8 per cent of global LNG exports were delivered via the Suez Canal and 2.5 per cent via the Panama Canal.The disruption at these chokepoints affects the equivalent of just over 10 per cent of global LNG trade,

10、but does not prevent shipping between the Atlantic and Pacific Basins.After accounting for diversions,the re-routing of cargoes via longer routes and consequent curtailment of LNG shipping capacity could reduce global LNG supply(which was 400 mt in 2023)by 5.4 mt(1.35 per cent)year-on-year.The reduc

11、tion falls to 0.9 per cent when accounting for new supply from West Africa,which will ramp up in the second half of 2024.That minor reduction in global supply is relatively limited compared to fluctuations in global LNG demand,and could explain the limited reaction in European and Asian benchmark LN

12、G prices.The disruption primarily affects LNG deliveries to Europe from Qatar,and deliveries to Asia from the United States,Russia,Algeria,and Egypt.As a consequence,cargoes are being re-routed via the Cape of Good Hope(South Africa),or diverted to other markets.The longer routes imply greater shipp

13、ing costs(daily charter costs and fuel costs for vessels)and a smaller volume of LNG that can be delivered by each vessel over a given period of time.These increased operational costs(in time and money)represent an inter-basin LNG shipping premium that will be borne by the exporters.These additional

14、 costs will only be recouped through higher sales prices if the disruption causes LNG import prices in Europe and Asia to rise.Exports to Asia from the United States and Russia are continuing via the Cape of Good Hope,while exports to Asia from North Africa have virtually ceased.Exports to Europe fr

15、om Qatar were sustained in January,but have fallen in February,suggesting some diversions of cargoes to Asia.From a European perspective,LNG supply from Qatar could potentially decline by 7.6 mt(50 per cent),due to a combination of cargo diversions to Asia and reduced effective shipping capacity for

16、 the remaining volume delivered to Europe.One-third of that reduction in supply from Qatar could be offset by North African LNG supply diverted from Asia to Europe,and another 1.5 mt could be sourced from new export projects in West Africa in the second half of 2024.The easing of drought restriction

17、s,following the start of the Panamanian rainy season in May,could allow more efficient use of LNG carriers for US exports to Asia.That additional LNG shipping capacity could also make more US LNG available to Europe in the second half of 2024.This impact could be enhanced if additional Qatari LNG su

18、pply to Asia reduces Asian demand for spot LNG cargoes from the United States,allowing more US spot cargoes to be delivered to Europe.The fact that benchmark LNG prices in Europe and Asia in February were the lowest since April 2021,suggests that the market perceives the impact of the disruption to

19、be both limited,and insufficient to outweigh the bearish short-term global LNG market outlook.The cumulative impact of the disruption will grow,as each subsequent LNG delivery with a longer round-trip time is later than it would have otherwise been.The extent to which this is ameliorated depends on

20、the extent of cargo diversions and reduction in inter-basin shipping through trading and portfolio optimisation.The current curtailments at Panama and the Red Sea could therefore illustrate both the extent of potential improvements in efficiency in LNG shipping and its limitations.iv The contents of

21、 this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Table of Contents Acknowledgements.ii Executive Summary.iii Table of Figures.vi 1.Introduction.1 2.Curtailment of all forms of shipping via the

22、 Panama Canal and Red Sea.2 2.1.Curtailment of all forms of shipping via the Panama Canal.2 2.2.Curtailment of all forms of shipping in the Red Sea.3 3.Curtailment of LNG deliveries via the Panama Canal.5 3.1.The impact of Panama curtailments on LNG shipping,and the US in particular.5 3.2.US LNG del

23、iveries to Asia by route.6 3.2.US LNG between Europe and Asia.7 3.3.The impact of shipping distances.8 4.The impact of Red Sea disruption on LNG shipping.9 4.1.How many LNG carriers per day usually pass through the Suez Canal?.9 4.2.When did LNG shipping via the Red Sea cease?.9 4.3.Which LNG export

24、ers and importers are most affected by Red Sea disruption?.10 4.4.What volume of LNG is affected by the disruption at Panama and the Red Sea?.10 5.The impact on Qatari LNG exports.11 5.1.Qatari LNG export volumes by destination in 2023.11 5.2.Qatari LNG exports since 12 January 2024.12 5.3.Shipping

25、distances from Qatar to Europe and Asia.13 5.4.Which European regasification terminals receive Qatari LNG?.13 5.5.The implications of longer shipping distances for Qatari LNG.13 5.6.Conclusions regarding Qatari LNG.14 6.The impact on Russian LNG exports.15 6.1.Exports from Yamal LNG to Europe and As

26、ia.15 6.2.The Northern Sea Route and trans-shipment in NW Europe for deliveries via Suez.15 6.3.Yamal LNG export volumes by destination in 2023.16 6.4.Yamal LNG exports since 12 January 2024.17 6.5.Shipping distances from Zeebrugge to Asia via Suez and Cape of Good Hope.17 6.6.The implications of lo

27、nger shipping distances for Russian LNG.17 7.The impact on North African LNG deliveries to Asia.18 7.1.North African LNG exports to Europe and Asia.18 7.2.The suspension of Algerian LNG exports to Asia?.18 7.3.The suspension of Egyptian LNG exports to Asia?.19 7.4.Implications of North African cargo

28、 diversions.19 8.Overcoming the inter-basin shipping premium.20 v The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.8.1.The potential for additional Atlantic Basin supply to Euro

29、pe.20 8.2.Potential for optimisation within portfolios and through trading.21 9.The market response.22 9.1.Decline and stabilisation of shipping rates.22 9.2.Benchmark gas prices showing muted response to Red Sea disruption.23 9.3.Europe-Asia spreads remain relatively narrow.24 10.Waves of impact:me

30、asuring LNG at the point of import,not export.25 10.1.First wave:cargoes diverted.25 10.2.Second wave:late arrival of re-routed cargoes.25 10.3.Third wave:impact of longer round-trips.26 11.Implications for and the global LNG market.27 11.1.Impact on Europe of reduction in Qatari LNG supply.27 11.2.

31、Could a reduction in Qatari LNG exports notably tighten the global LNG market?.28 12.Conclusion.29 Appendix:Map of Middle Eastern shipping points and LNG export terminals.31 vi The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford In

32、stitute for Energy Studies or any of its Members.Table of Figures Figure 1:Daily transit calls at the Panama Canal(vessels/day).2 Figure 2:Daily transit calls at Bab al-Mandab southern entrance to the Red Sea(vessels/day).3 Figure 3:Daily transit calls at the Suez Canal northern entrance to the Red

33、Sea(vessels/day).4 Figure 4:Daily transit calls at the Cape of Good Hope(vessels/day).4 Figure 5:Monthly LNG shipping via the Panama Canal(number of cargoes and mt of LNG).5 Figure 6:Monthly number of laden LNG carriers traversing the Panama Canal by cargo source.6 Figure 7:US LNG annual exports to

34、Asia by delivery route,volume(mt)and share of total(%).6 Figure 8:US LNG monthly exports to Asia by delivery route,volume(mt),share of total(%).7 Figure 9:Weekly US LNG exports by destination since 2 January 2023(mt per week).8 Figure 10:Monthly US LNG exports by destination(share of total).8 Figure

35、 11:Number of LNG carriers that traversed the Suez Canal in 2023,by export and import.10 Figure 12:Global LNG exports by route(mt per year).11 Figure 13:Qatari LNG exports by destination(mt per week).11 Figure 14:Round-trip shipping distances from Ras Laffan to European regasification terminals and

36、the potential reduction in deliveries to those terminals in 2024.14 Figure 15:Yamal LNG exports by destination(mt per week).16 Figure 16:North African LNG exports by destination(mt per week).18 Figure 17:Weekly LNG exports from non-US Atlantic Basin suppliers by destination continent(mt per week).20

37、 Figure 18:TTF prices by month of delivery since 1 September 2023(USD/MMBtu).23 Figure 19:Argus price assessments for LNG delivered to NE Asia&NW Europe(USD/MMBtu).24 Figure 20:Premium of Argus North-East Asia LNG delivered price assessment over Argus North-West Europe LNG delivered price assessment

38、(USD/MMBtu).24 Figure 21:EU plus UK weekly LNG imports by source(mt per week).26 Figure 22:EU plus UK LNG imports by source three-week rolling average(mt per week).26 1 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute

39、for Energy Studies or any of its Members.1.Introduction In the second half of 2023,droughts led to lower water levels and a subsequent reduction in LNG shipping via the Panama Canal,with monthly vessel transits falling by more than half between August 2023 and January 2024.This primarily impacted US

40、 LNG shipments to Asia,of which a considerable number were re-routed via the Suez Canal.Then,on 19 November 2023,Houthi rebels in Yemen began attacking ships passing through the Red Sea.In response,the US and UK began air strikes against the rebels on 12 January 2024.Since that date,no laden LNG car

41、riers have passed through the Red Sea.As of 26 February 2024,there are no LNG tankers operating in the area,either at the Suez Canal(the northern entrance to the Red Sea)or to the south,at the Bab al-Mandab and Gulf of Aden.The practical effect of the curtailment of LNG shipping via Panama and cessa

42、tion of shipping via the Red Sea is that the movement of LNG cargoes between the Atlantic and Pacific Basins requires a lengthy voyage around the Cape of Good Hope(South Africa)or Cape Horn(Chile).This adds to shipping costs(in terms of vessel chartering and fuel costs)and reduces the efficiency of

43、the LNG carrier fleet(due to each delivery requiring a longer round-trip time).The additional cost in both time and money of moving cargoes between the Atlantic and Pacific Basins via the Cape of Good Hope or Cape Horn represents an inter-basin shipping premium.This paper analyses the disruption in

44、terms of the exporters affected(primarily the United States,Qatar,Algeria,Egypt,and Russia)and the impact of the disruption on global LNG market tightness and on European LNG imports in particular.The paper begins by examining the reduction of all forms of shipping via the Panama Canal and Red Sea,b

45、efore then assessing the impact on LNG shipping in particular,including the identification of the suppliers most affected,and the volume of LNG shipping impacted by the disruption.For each of the five LNG exporters primarily affected by the disruption,the following questions are addressed:1.What are

46、 their current export volumes?2.How are those volumes split between Europe,Asia,and elsewhere?3.What volumes of export are impacted by the Panama Canal and Red Sea disruption?4.Are LNG carriers being re-routed via the Cape of Good Hope,or diverted to other destinations?5.What are the implications fo

47、r shipping distances?6.If cargos are not diverted to other markets,how much shipping capacity(effective export capacity)is lost due to the longer round-trip times?The subsequent section assesses the potential for the impact of the disruption to be alleviated through additional supply in the Atlantic

48、 Basin,and optimisation and trading to overcome the inter-basin shipping premium on moving cargoes between the Atlantic and Pacific Basins.The muted market response is then considered in terms of daily charter rates for LNG carriers,benchmark gas and LNG prices in Europe and Asia,and the relatively

49、narrow spread between those European and Asian prices.Next,the forward-looking analysis identifies three(chronological)waves of impact of the Red Sea disruption are proposed,between the immediate aftermath of the disruption in the second half of January,the late arrival of LNG cargoes in late Januar

50、y and the first half of February,and then the growing cumulative impact due to longer round trips delaying subsequent cargoes from February/March onwards.Finally,the implications of the disruption and its impact are analysed with regard to both European LNG imports and the tightness of the global LN

51、G market.The key conclusion is that the market has thus far borne the costs of the inter-basin shipping premium,and continued to send cargoes to their originally-intended destinations via longer routes.The longer that continues,the greater the cumulative impact.However,the longer the disruption cont

52、inues,the more likely we are to see optimisation within,and trading around,portfolios to reduce the number of inter-basin deliveries.Moreover,the Panama Canal disruption is likely to ease after the rainy season begins in May,while new Atlantic Basin supply from West Africa is also due to launch and

53、ramp up during 2024.These factors,combined with a broader bearish market outlook,explains the lack of benchmark LNG price response to the disruption of LNG shipping via key chokepoints.2 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the

54、 Oxford Institute for Energy Studies or any of its Members.2.Curtailment of all forms of shipping via the Panama Canal and Red Sea 2.1.Curtailment of all forms of shipping via the Panama Canal As Figure 1 below illustrates,the volume of shipping of all types via the Panama Canal has been curtailed s

55、ince October 2023,due to droughts,concerns over water levels in the canal,and restrictions imposed by the Panama Canal Authority.Figure 1:Daily transit calls at the Panama Canal(vessels/day)Data source:PortWatch1 As illustrated by the map in the appendix,the Panama Canal is not a single channel from

56、 coast to coast,but consists of the artificial Lake Gatn in its central part,with short canals at either end.At each end there are three parallel canals,of which two are the(narrower)originals and one(wider)is the expansion,which was opened in 2016.2 It is through this,newer,wider,canal that LNG car

57、riers pass at either side of Late Gatn.Lake Gatn is 26m(85 feet)above sea level,and requires constant replenishment from river tributaries,especially during the rainy season that usually lasts from May to December.3 Accessing Lake Gatn requires vessels to traverse three locks at each side of Lake Ga

58、tn.But every time a ship passes through the lock system,water is lost out to the Atlantic and Pacific Oceans.Therefore,the Panama Canal system is susceptible to drought causing water levels in Lake Gatn and the lock systems to fall,especially if the rainy season does not provide sufficient replenish

59、ment.One method of water conservation is to limit the passage of vessels through the lock systems.On 25 July 2023,the Panama Canal Authority(PCA)announced that,in response to the ongoing effects of the dry season it would reduce the cap on the number of vessels allowed to traverse the canal to 32 pe

60、r day.4 Then,on 31 October 2023,the PCA reported that the country had experienced drought related to El Nino,and that October 2023 was the driest since records began in 1950.Consequently,the PCA announced tighter restrictions on the number of vessels that would be allowed to traverse the canal each

61、month.1 PortWatch,2024.Trade Disruptions in the Panama Canal.https:/portwatch.imf.org/pages/44d73fd00bbc4f73a16d46d5beb11b4d 2 Panama Canal Authority,2024.Discover the Expanded Canal.https:/ World Bank,2024.Climate change knowledge portal:Panama.https:/climateknowledgeportal.worldbank.org/country/pa

62、nama/climate-data-historical 4 Panama Canal Authority,2023.Panama Canal maintains competitive draft for the following months.Press Release,25 July.https:/ -5 10 15 20 25 30 35 40 45Total7-Day Moving Average7-Day Moving Average(Prev Year)3 The contents of this paper are the authors sole responsibilit

63、y.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.According to the announcement,the number of reservation slots would be reduced from 25(1-7 November),to 24(8-30 November),22(December),20(January 2024),and 18(February 2024).5 Better news f

64、ollowed on 15 December 2023,when the PCA announced that as a consequence of more rainfall and the impact of water-saving measures being better than expected,the number of reservation slots would be raised from 22 in December to 24 in January.6 However,as the data from PortWatch7 in Figure 1 illustra

65、tes,the seven-day moving average number of vessels per day traversing the Panama Canal remains substantially lower year-on-year,with the decline in shipping via the Panama Canal predating the decline in shipping via the Red Sea by several months.2.2.Curtailment of all forms of shipping in the Red Se

66、a As illustrated by the map in the appendix to this paper,the Red Sea is accessed via the Suez Canal at its northern end and via the Bab al-Mandab at its southern end.The Houthi rocket attacks have been concentrated around the Bab al-Mandab.8 According to data from PortWatch,shipping through the Red

67、 Sea at the Bab al-Mandab did not begin to decline until the 18 December 2023,with a renewed decline from 12 January 2024.Between 1 October and 18 December,the number of vessels passing through the Bab al-Mandab was generally at least 60 per day,and seven-day moving average number was at least 70.Ho

68、wever,since then,the number of vessels passing through has falling steadily.The seven-day moving average fell below 60 vessels per day on 21 December,below 50 on 1 January,and below 40 on the 15 January.The latest data shows the seven-day moving average falling to 30 vessels per day from 29 January

69、and remaining at similar levels through the first three weeks of February,down from 58-77 vessels per day a year earlier.Figure 2:Daily transit calls at Bab al-Mandab southern entrance to the Red Sea(vessels/day)Data source:PortWatch9 5 Panama Canal Authority,2023.The driest month of October since 1

70、950.Press Release,31 October.https:/ Panama Canal Authority,2023.The driest month of October since 1950.Press Release,31 October.https:/ PortWatch is a collaborative project between the IMF and the Environmental Change Institute at the University of Oxford 8 BBC,2024.Tracking Houthi attacks in the R

71、ed Sea.BBC News,20 January.https:/www.bbc.co.uk/news/world-middle-east-68031732 9 PortWatch,2024.Trade Disruptions in the Red Sea.https:/portwatch.imf.org/pages/573013af3b6545deaeb50ed1cbaf9444 18/12/2023,72 -10 20 30 40 50 60 70 80 90 10001/10/202301/11/202301/12/202301/01/202401/02/2024Total7-Day

72、Moving Average7-Day Moving Average(Prev Year)4 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.The volume of shipping through the Suez Canal is slightly higher,as it includes v

73、essels passing from the Mediterranean to ports in Egypt,Israel,Jordan,and Saudi Arabia in the northern part of the Red Sea.Between 25 January and 20 February,the seven-day moving average number of vessels passing through the Suez Canal was 34-41 vessels per day,down from 65-72 a year earlier.Figure

74、3:Daily transit calls at the Suez Canal northern entrance to the Red Sea(vessels/day)Data source:PortWatch10 A significant proportion of vessels that can no longer pass through the Red Sea are being redirected round the Cape of Good Hope,at the southern tip of Africa.From early October to late Decem

75、ber,the seven-day moving average was for 45-55 vessels per day transiting the Cape of Good Hope.During January that seven-day moving average fluctuated between 60 and 72 vessels per day,rising to 76 on 30-31 January,and peaking at 87 per day on 18 February.Figure 4:Daily transit calls at the Cape of

76、 Good Hope(vessels/day)Data source:PortWatch11 10 PortWatch,2024.Trade Disruptions in the Red Sea.https:/portwatch.imf.org/pages/573013af3b6545deaeb50ed1cbaf9444 11 PortWatch,2024.Trade Disruptions in the Red Sea.https:/portwatch.imf.org/pages/573013af3b6545deaeb50ed1cbaf9444 23/12/2023,71 -10 20 30

77、 40 50 60 70 80 90 10001/10/202301/11/202301/12/202301/01/202401/02/2024Total7-Day Moving Average7-Day Moving Average(Prev Year)25/12/2023,47 09/12/2023,44 -20 40 60 80 100 12001/10/202301/11/202301/12/202301/01/202401/02/2024Total7-Day Moving Average7-Day Moving Average(Prev Year)5 The contents of

78、this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.The curtailment of shipping via the Panama Canal from October 2023 onwards likely contributed to shipping via the Cape of Good Hope being higher

79、 year-on-year before the Red Sea disruption.By February 2024,with transit via the Bab al-Mandab 35-40 vessels a day lower than usual,transit via the Suez Canal 30 vessels per day lower than usual,and transit around the Cape of Good Hope 30-50 vessels per day higher than usual,the situation suggests

80、that most of the vessels being diverted from the Red Sea route are being re-routed via the Cape of Good Hope,but with some cargoes being diverted to other markets.This is most likely with regard to fungible commodities,such as LNG.3.Curtailment of LNG deliveries via the Panama Canal 3.1.The impact o

81、f Panama curtailments on LNG shipping,and the US in particular While total shipping via the Panama Canal declined by around one-third between August 2023 and January 2024,the decline in LNG shipping in that same period was around two-thirds.In January 2024,just seven laden LNG carriers12 traversed t

82、he Canal.No laden LNG carriers have passed through the Panama Canal between 28 January and 25 February 2024.Figure 5:Monthly LNG shipping via the Panama Canal(number of cargoes and mt of LNG)Data from Kpler LNG Platform subscription required.Please note this graph shows only laden(not ballast)and wh

83、ole cargoes only.This disruption primarily affects US LNG exports to Asia,as illustrated in the breakdown of the sources of the LNG cargoes that traversed the Panama Canal in the past two years(Figure 6).From January 2022 to March 2023,12-15 US LNG cargoes per month traversed the Panama Canal,fallin

84、g to eight in May,and rebounding to 15-17 per month in June-August 2023.This fell to 8-10 per month in October-December 2023,seven in January 2024,and none in the period 1-25 February.Conversely,in the calendar year 2023,just eight non-US LNG cargoes passed through the Panama Canal(seven from Trinid

85、ad&Tobago and one from Peru),the last of which traversed the Panama Canal on 19 November.12 Six whole cargoes and one partial cargo -0.14 0.28 0.42 0.56 0.70 0.84 0.98 1.12 1.26-2 4 6 8 10 12 14 16 18Jan-2022Feb-2022Mar-2022Apr-2022May-2022Jun-2022Jul-2022Aug-2022Sep-2022Oct-2022Nov-2022Dec-2022Jan-

86、2023Feb-2023Mar-2023Apr-2023May-2023Jun-2023Jul-2023Aug-2023Sep-2023Oct-2023Nov-2023Dec-2023Jan-2024No.of Vesselsmt of LNG 6 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Fig

87、ure 6:Monthly number of laden LNG carriers traversing the Panama Canal by cargo source Data from Kpler LNG Platform subscription required 3.2.US LNG deliveries to Asia by route Even prior to the to the curtailment of shipping via the Panama Canal,LNG deliveries from the United States to Asia via non

88、-Panama routes were normal,and should not be seen solely as a reaction to the curtailment of shipping via Panama.Between 2019 and 2023,between 5.9 and 17.7 mtpa of LNG was delivered from the United States to Asia(measured at the point of export)by routes other than the Panama Canal,with the share of

89、 those deliveries in total US LNG exports ranging from 40 to 52 per cent in 2019-2022,rising to 62 per cent in 2023.In 2019-2022,the volumes delivered via the Panama Canal and by other routes rose and fell in parallel,following the overall trend of rising and falling US LNG exports to Asia.In 2023,t

90、he Panama Canal restrictions saw the share of deliveries via the Panama Canal fall from 63 per cent in February 2023 to 21 per cent in November 2023,25 per cent in December 2023,and 23 per cent in January 2024.Figure 7:US LNG annual exports to Asia by delivery route,volume(mt)and share of total(%)Da

91、ta from Kpler LNG Platform subscription required -2 4 6 8 10 12 14 16 18Jan-2022Feb-2022Mar-2022Apr-2022May-2022Jun-2022Jul-2022Aug-2022Sep-2022Oct-2022Nov-2022Dec-2022Jan-2023Feb-2023Mar-2023Apr-2023May-2023Jun-2023Jul-2023Aug-2023Sep-2023Oct-2023Nov-2023Dec-2023Jan-2024 United States Trinidad and

92、Tobago Other5.9 10.5 17.7 8.6 14.7 0%10%20%30%40%50%60%70%-2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0200222023 Panama Canal(mt)Other Routes(mt)Panama Canal(%)Other Routes(%)7 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of t

93、he Oxford Institute for Energy Studies or any of its Members.In absolute terms,US LNG exports to Asia in 2023 totalled 23.7 mt,of which 8.98 mt were delivered via the Panama Canal,8.65 mt via the Suez Canal,and 6.03 mt via Other Routes(primarily the Cape of Good Hope).The key point is that,prior to

94、the Red Sea disruption,US LNG deliveries to Asia via both the Suez Canal and the Cape of Good Hope were sizeable,and the increase in deliveries via the Cape of Good Hope has offset the decline in deliveries via Suez.Therefore,US deliveries to Asia via the long route away from Panama is not new,but t

95、he shift from Suez to the Cape has added even more distance to those non-Panamanian deliveries.In the period between January 2021 and November 2023,US LNG deliveries to Asia via the Cape of Good Hope averaged 0.45 mt per month and 20 per cent of the total deliveries to Asia in that month.They exceed

96、ed 1.05 mt and 33 per cent of total US LNG deliveries to Asia just twice.13 Those historic peaks were repeated in December 2023(1.4 mt 63 per cent)and January 2024(1.1 mt 77 per cent).Figure 8:US LNG monthly exports to Asia by delivery route,volume(mt),share of total(%)Data from Kpler LNG Platform s

97、ubscription required This delivery of US LNG to Asia via the Cape of Good Hope represents an inefficient use of LNG shipping capacity that could theoretically be improved by the greater use of swaps and portfolio optimisation.This represents scope for improvement that could offset capacity constrain

98、ts caused by the loss of Qatari access to the Red Sea for deliveries to Europe.3.2.US LNG between Europe and Asia With the Suez Canal route closed,US LNG exports now face a choice between a relatively short journey to Europe or a much longer journey to Asia round the southern tip of Africa.Since the

99、 deliveries of US LNG to Asia via the Panama Canal began to decline in July 2023,the volume of US LNG exports to Europe rose from less than 1 mt per week in July 2023 to an average of 1.25 mt per week in the period October-December 2023.That average of 1.25 mt per week was sustained in the first hal

100、f of January(prior to the Suez Canal disruption)and in the weeks between 15 January and 25 February.Between July 2023 and January 2024,the share of Europe in total US LNG exports rose while the share of Asia fell,back to the relative shares seen in the first part of the year(see Figure 9 and Figure

101、10).13 March-April 2021,with volumes of 1.25-1.5 mt and shares of 42-29 per cent 0%10%20%30%40%50%60%70%80%90%-0.5 1.0 1.5 2.0 2.5 3.0 Panama Canal(mt)Other Routes(mt)Panama Canal(%)Other Routes(%)8 The contents of this paper are the authors sole responsibility.They do not necessarily represent the

102、views of the Oxford Institute for Energy Studies or any of its Members.Figure 9:Weekly US LNG exports by destination since 2 January 2023(mt per week)Data from Kpler LNG Platform subscription required.Data up to week 19-25 February 2024.Figure 10:Monthly US LNG exports by destination(share of total)

103、Data from Kpler LNG Platform subscription required.3.3.The impact of shipping distances From Corpus Christi on the US Gulf Coast,it is just over 5,000nm(14 days)to Rotterdam.By contrast,the distance from Corpus Christi to Hong Kong is about 11,000nm(28 days)via the Panama Canal,13,300nm(34 days)via

104、the Suez Canal,and 14,500nm(37.5 days)round the Cape of Good Hope.Longer distances not only mean higher shipping costs,but also reduce the effective capacity of the shipping fleet,because the vessels spend more time in transit,both laden outbound and returning ballast.14 For example,assuming three d

105、ays in port during the round-trip,an additional 3.5 days each way from Corpus Christi to Hong Kong via the Cape of Good Hope rather than Suez Canal increases the round-trip time from 71 days to 78 days.This reduces the number of possible round-trips per year from 5.14 to 4.62 a reduction of 10 per c

106、ent.14 Data from Kpler LNG Platform.subscription required -0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Europe Asia Americas Unknown0%10%20%30%40%50%60%70%80%90%Jan2023Feb2023Mar2023Apr2023May2023Jun2023Jul 2023Aug2023Sep2023Oct2023Nov2023Dec2023Jan2024 Europe Asia Americas 9 The contents of this pa

107、per are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Given that the United States shipped 8.7 mt of LNG to Asia via the Suez Canal in 2023,a 10 per cent reduction in that volume would imply a decrease of

108、0.87 mt.If all other deliveries remained unchanged,and the number of LNG carriers available to ship LNG to Asia remained constant,this constraint on shipping capacity would reduce US LNG exports by 1 per cent year-on-year in 2024.Even prior to the disruption in the Red Sea and the restrictions at th

109、e Panama Canal,shipping distances alone made Europe a more commercially attractive destination than Asia at price parity.The restrictions at the Panama Canal since 31 July 2023(and especially since 31 October 2023)may have influenced the continuous increase in US LNG supplies to Europe in the second

110、 half of 2023.In this context,re-routing cargoes from the Suez Canal to Cape of Good Hope may not make the journey from the US Gulf Coast to North-East Asia prohibitive,but may be sufficient to change the cost calculations and divert some US LNG cargoes from Asia to Europe,as we have seen in mid-Jan

111、uary.Such cost calculations will depend partly on shipping rates and partly on the price spread between Europe and Asia.The smaller the Asian premium,the less the incentive to undertake longer round-trip deliveries,unless obligated to do so by destination restrictions in term contracts.4.The impact

112、of Red Sea disruption on LNG shipping 4.1.How many LNG carriers per day usually pass through the Suez Canal?Data from the Kpler LNG Platform records the port calls of LNG carriers,and the number of port calls at the Suez Canal serve as a proxy for the number of LNG carriers passing through the Red S

113、ea.According to Kpler,the number of laden LNG carriers that made port calls at the Suez Canal(travelling north to south or south to north)fell from 519 in 2021 to 465 in 2022 and 434 in 2023.Across those three years combined,the average was 39 per month,ranging from a high of 63(January 2021)to a lo

114、w of 25(February 2022).In 2023,the monthly averages ranged from 29 to 41,with an average of 36 across the year as a whole.4.2.When did LNG shipping via the Red Sea cease?In the period between 1 and 12 January 2024,eight laden LNG carriers passed through the Suez Canal,of which five were Qatari deliv

115、eries to Europe and three were Russian cargoes from the Yamal LNG liquefaction plant for delivery to Asia(one trans-shipped at Murmansk and two re-loaded at Zeebrugge).One vessel passed through the Suez Canal on 2 January,three on 6 January,two on 11 January,and one on 12 January.One ballast vessel(

116、the Clean Horizon),traversed the Suez Canal after that date(16 January),on route to Zeebrugge having delivered a cargo of Russian LNG to Rudong(China).No other LNG carriers laden or ballast have passed through the Suez Canal since that date.All three of those vessels that passed through on 11-12 Jan

117、uary subsequently declared their intended return journey port calls as Las Palmas(on the Canary Islands)or Walvis Bay(in Namibia),which imply return journeys via the Cape of Good Hope.The same is true of the Clean Horizon,which,having reloaded at Zeebrugge on 24 January,travelled around the Cape of

118、Good Hope on route to Shanghai.On 15 January,Reuters reported that Qatar had halted LNG shipments via the Red Sea,while it assessed the security situation.15 At the time of writing(26 February),ship tracking data from Kpler states that there are no vessels declared for the Suez Canal,and no LNG carr

119、iers in the area of the Suez Canal,Red Sea,Bab al-Mandab,or Gulf of Aden.It is likely that,having fallen to zero in mid-January,LNG shipping via the Red Sea will remain at that level until the security situation improves.15 El Dahan,M.,Chow,E.,and Mills,A.,2024.QatarEnergy halts Red Sea LNG shipping

120、 amid attacks,seeking security advice.Reuters,15 January.https:/portwatch.imf.org/pages/573013af3b6545deaeb50ed1cbaf9444 10 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.4.3.

121、Which LNG exporters and importers are most affected by Red Sea disruption?Of the 434 LNG cargoes that passed through the Suez Canal in 2023,a combined 240(55 per cent)traversed the Suez Canal from north to south,destined for the Middle East(Jordan or Kuwait)or Asia.In the opposite direction,195 carg

122、oes(45 per cent)traversed the Suez Canal from south to north,destined for Europe(EU-27 and the UK).16 In terms of export cargoes that passed through the Suez Canal from north to south,130 were sourced from the United States,and four from elsewhere in the Americas.The 45 cargoes that originated in Eu

123、rope(EU-27,UK,and Turkey)were re-exports,of which 34(75 per cent)were re-loaded at Zeebrugge in Belgium and a further seven(15 per cent)were reloaded at Montoir in France,plus two each from Spain and Turkey.In addition,34 cargoes from North Africa(Algeria&Egypt)and 25 cargoes from Russia were joined

124、 by two cargoes delivered from Nigeria to India.In terms of exports that traversed the Suez Canal from south to north,Qatar accounted for 180 cargoes,Oman 8 cargoes,and UAE one cargo.In addition,four cargoes originated from Mozambique and one from Indonesia.This gives a total of 194 cargoes,of which

125、 93 per cent originated in Qatar.Overall,the south-to-north export flow is overwhelmingly Qatari cargoes destined for Europe,while the north-to-south flows are more diverse,with cargoes from the United States taking the largest share(54 per cent),with the rest mostly split between Russian cargoes(di

126、rect from Yamal),European reloads,and North African cargoes(10-19 per cent each).Figure 11:Number of LNG carriers that traversed the Suez Canal in 2023,by export and import Data from Kpler LNG Platform subscription required 4.4.What volume of LNG is affected by the disruption at Panama and the Red S

127、ea?In 2023,total,global gross LNG exports amounted to 412.3 mt.Of that volume,32.4 mt was delivered via the Suez Canal,10.3 mt via the Panama Canal,2.3 mt via the Northern Sea Route,and 367.3 mt via Other Routes.Therefore,deliveries via the Suez Canal accounted for 7.9 per cent of total LNG shipping

128、 in 2023,while shipping via the Panama Canal accounted for a further 2.5 per cent.Given the ongoing curtailment of LNG shipping via the Panama Canal,the fact that LNG shipping via those two canals accounted for just over 10 per cent of global LNG shipping in 2023 means that disruption to those flows

129、 is potentially significant to the global LNG market,but not critical.16 Since January 2022,Turkey has imported just five LNG cargoes via the Suez Canal,of which three arrived in Nov-Dec 2022 and two in Jan-Feb 2023.Those five cargoes were sourced from Qatar,Oman,Mozambique,and Indonesia.134 25 45 3

130、4 2 4 189 1-196 1-14 223 -50 100 150 200 250AmericasRussiaEuropeNorthAfricaWestAfricaEastAfricaMiddleEastAsiaExportsImports 11 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.F

131、igure 12:Global LNG exports by route(mt per year)Data from Kpler LNG Platform subscription required 5.The impact on Qatari LNG exports 5.1.Qatari LNG export volumes by destination in 2023 In 2023,Qatar exported 79.8 mt of LNG,of which 15.1 mt(19 per cent)was delivered to Europe,almost exclusively vi

132、a the Suez Canal.In the 60 weeks between the week commencing 2 January 2023 and the week commencing 19 February 2024,all but four weeks saw Qatari LNG exports between 1.19 and 1.82 mt,at an average of 1.54 mt,which may be considered a normal level of Qatari LNG exports.17 Figure 13:Qatari LNG export

133、s by destination(mt per week)Source:Data from Kpler LNG Platform subscription required.Data up to week 19-25 February 2024.17 Data from Kpler LNG Platform.Subscription required.32 30 36 35 32 14 15 18 12 10 1 2 3 2 2 313 316 325 351 367 -50 100 150 200 250 300 350 400-5 10 15 20 25 30 35 40201920202

134、02120222023Suez CanalPanama CanalNorthern Sea RouteOther Routes-0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 Europe Asia Americas Unknown 12 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of

135、 its Members.Of those weekly Qatari export volumes in 2023,an average of 0.29 mt was delivered to Europe and 1.24 mt delivered to Asia.In 2023 as a whole,1,053 cargoes left Ras Laffan,of which 818 were delivered to Asia,56 to the Middle East(Kuwait and UAE),and two to Argentina.The remaining 177 wer

136、e delivered to Europe,at an average of 3.4 cargoes per week.Of the 177 cargoes delivered to Europe,only one did not pass through the Suez Canal.Throughout 2023,Asia was the primary market for Qatari LNG exports.In December 2023,Qatari exports averaged 0.23 mt to Europe and 1.38 mt to Asia.In the six

137、 weeks between 15 January and 25 February(since the cessation of LNG shipping in the Red Sea),those volumes have remained similar:0.23 mt to Europe and 1.39 mt to Asia,with the remaining 0.02 mt to the Americas.In that period between 15 January and 25 February,the volume of cargos loaded(1.63 mt per

138、 week)was slightly higher than the average for 2023 as a whole(1.53 mt).The week 12-18 February was notable as only the third week since at least 1 January 2009 that no cargoes destined for Europe were loaded at Ras Laffan,although two were loaded on 20-21 February.The monthly cargo loadings do not

139、show much change between December 2023 and January 2024.The total number of cargo loadings in December 2023(95)and January 2024(96)were similar,as were the number of cargoes destined for Asia(80 in December and 79 in January),for the Middle East(2 in December and 4 in January),and for Europe(13 in b

140、oth December and January).A further 73 cargoes were loaded in the period 1-25 February,with 92 planned for February as a whole.Taken together,these data suggest that total Qatari cargo loadings and export volumes(measured at the point of export)have not been negatively impacted by the disruption.The

141、 fact that exports destined for Europe are continuing suggests an acceptance of re-routing via the Cape of Good Hope,although the weekly cargo loadings destined for Europe could decline if cargoes begin to be diverted to other markets,and the longer round trips begin to negatively impact effective s

142、hipping capacity.5.2.Qatari LNG exports since 12 January 2024 Analysis of individual cargoes illustrates the re-routing that took place since January 2024.Of the 21 cargoes destined for Europe that were loaded between 1 January and 25 February,the Fraiha(loaded at Ras Laffan on 1 January)and Al-Khar

143、saah(loaded on 2 January)passed through the Suez Canal on 11-12 January,but returned to Qatar via the Cape of Good Hope.These followed two other cargoes(Al-Gattara and Al-Rayyan)that left Ras Laffan on 27/31 December,passed through the Suez Canal on 6/11 January,delivered cargoes to Italy/Spain,and

144、returned via the Cape of Good Hope.In 7-15 January,four cargoes left Ras Laffan for Europe,declared for Suez,and then diverted round the Cape of Good Hope.These were the Al-Huwaila(7 January),Al-Nuaman(10 January),Al-Ghariya(10 January),and Mesaimeer(15 January).Thereafter,the 15 vessels that left R

145、as Laffan made directly for the Cape of Good Hope.18 In the last few days of February,one more cargo is scheduled for delivery to Europe(the Zekreet on 27 February),while three scheduled for departure have not declared their destination.If one of those three is delivered to Europe,this implies 10 ca

146、rgoes for Europe in February,down from 13 in both December 2023 and January 2024.This could imply the diversion of 25 per cent of Qatari cargoes from Europe to Asia,while the remainder are re-routed via the Cape of Good Hope.A clear chronology can be established regarding Qatari LNG cargoes bound fo

147、r Europe:1)the vessels that left Ras Laffan on 1-2 January passed through the Suez Canal on 11-12 January and made their return journeys via the Cape of Good Hope,2)vessels that left Ras Laffan between 7 and 15 January declared for Suez but diverted to the Cape of Good Hope,and 3)vessels that left R

148、as Laffan after 15 January made directly for the route round the Cape of Good Hope,which is consistent with the Qatari announcement on 15 January noted in the introduction to this paper.18 Al-Sheehaniya and Al-Khor(20 January),Al-Bahiya(21 January),Celsius Glarus(23 January),Umm Al-Amad(25 January),

149、Al-Rekayyat(26 January),Al-Shamal(29 January),Maran Gas Mystras(1 February),Al-Ghashamiya(3 February),Al-Kharaitiyat(7 February),Al-Wakrah(8 February),Tembek(10 February),Stena Clear Sky(12 February),Al-Thumama(20 February),and Grace Dahlia(21 February).13 The contents of this paper are the authors

150、sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.5.3.Shipping distances from Qatar to Europe and Asia While the shipping distances to North-West Europe and North-East Asia are comparable when the Suez Canal is available,

151、the difference between the two is stark when deliveries to Europe require a trip round the Cape of Good Hope.The journey from Qatar to Rotterdam is 6,500 nautical miles(nm)(17 days)via Suez Canal,but 11,000nm(29 days)round the Cape of Good Hope.19 From Qatar to Asia,it is 5,000nm(13 days)to Hong Kon

152、g and 6,500nm(17 days)to Tokyo via Sri Lanka and Singapore.20 This could encourage Qatari volumes to divert to Asia where possible,subject to contractual/destination restrictions,the ability of the seller to find a counterparty,the spread between European and Asian spot LNG prices,and the ability to

153、 secure regasification capacity in Asia.While the data from Kpler on LNG shipping highlights the re-routing of deliveries from Qatar to Europe away from the Red Sea route,as discussed above,the extent to which Qatari LNG export sales have shifted from Europe to Asia will only become clear in the com

154、ing weeks and months.5.4.Which European regasification terminals receive Qatari LNG?Within Europe,the supply of Qatari LNG is relatively concentrated.In 2023,93 per cent of Qatari LNG supply to Europe(14.1 mt)was landed at six European regasification terminals:Rovigo(Italy),Zeebrugge(Belgium),South

155、Hook(UK),Swinoujscie(Poland),Fos Cavaou(France),and Barcelona(Spain).Two of these terminals alone Rovigo(4.8 mt,or 31 per cent of the total)and Zeebrugge(3.3 mt,21 per cent)accounted for just over half the European imports of Qatari LNG in 2023.South Hook,Swinoujscie,and Fos Cavaou each accounted fo

156、r 11-12 per cent(1.7-1.8 mt),and Barcelona 6 per cent(0.9 mt).The remaining 7 per cent(1.1 mt)was landed at Gate Rotterdam(Netherlands),Isle of Grain and Dragon(UK),Cartagena(Spain),and Piombino(Italy).The relative impact of the curtailment of Qatari LNG supply will be felt particularly strongly in

157、Italy,where Qatar was the single-largest LNG supplier in 2023(41 per cent of total supplies)and in Poland,where Qatar was the second-largest LNG supplier in 2023(38 per cent of the total).In the UK,Qatar was also the second-largest supplier,but supplied only 14 per cent of total LNG imports.In Franc

158、e and Spain,Qatar was far from the largest supplier,providing 8 per cent and 5 per cent of total imports,respectively.Finally,Belgium is a different case,given that 20 per cent of its imports were re-exported in 2023,namely Russian cargoes trans-shipped for delivery to Europe.If those trans-shipped

159、volumes are excluded,Qatar supplied 39 per cent of Belgiums net LNG imports in 2023.Therefore,the curtailment of Qatari LNG supply to Europe will have its greatest impact on Italy,Poland,and Belgium,where Qatar accounted for roughly 40 per cent of net LNG imports in 2023.5.5.The implications of long

160、er shipping distances for Qatari LNG To gain a more precise understanding of the extent of the curtailment of volumes delivered due to longer journey times,it is possible to use ship tracking data(from Kpler)to examine the actual number of days between loading at Ras Laffan and discharging at Europe

161、an regasification terminals in 2023 and the first half of January 2024,for LNG carriers that made their deliveries via the Suez Canal with no diversions to deliver partial cargoes to other regasification terminals on route.This can then be compared with the data for scheduled port calls for LNG carr

162、iers that have already departed Ras Laffan and are currently on route to deliver cargoes to Europe via the Cape of Good Hope.As of 26 February,eight Qatari cargoes have been delivered via the Cape of Good Hope,with the first arriving on 9 February.The first Qatari LNG carrier to make the complete ro

163、und-trip from Ras Laffan to Europe and back via the Cape of Good Hope is due to arrive back at Ras Laffan on 5 March,after a 55-day round-trip.The remaining seven cargoes are expected to have round-trip times of 63-73 days.A further seven cargoes are en route,with the earliest having departed Ras La

164、ffan on 26 January.Calculations can be made specifically for Rovigo,Zeebrugge,Swinoujscie,and Barcelona.South Hook and Fos Cavaou are not scheduled to receive any Qatari cargoes in February.However,the physical 19 Authors estimate based on Google Maps 20 Data from Kpler LNG Platform.subscription req

165、uired.Number of days based on a constant speed of 16 knots.14 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.shipping distance from Ras Laffan via the Cape of Good Hope to Sou

166、th Hook is similar to Zeebrugge and the shipping distance to Fos Cavaou is similar to the distance to Barcelona,and so Zeebrugge and Barcelona can be used as a basis for calculations for South Hook and Fos Cavaou.Figure 14:Round-trip shipping distances from Ras Laffan to European regasification term

167、inals and the potential reduction in deliveries to those terminals in 2024 Rovigo Zeebrugge South Hook Swinoujscie Fos Cavaou Barcelona Total 2023 Average Days Per One-Way Trip 19.5 21.0 23.5 25.5 18.0 17.0 20.8 Scheduled Number of Days Per One-Way Post-Jan 2024 33.0 29.5 29.5 36.0 33.0 32.0 32.2 Ex

168、tra Number of Days 13.5 8.5 6.0 10.5 15.0 15.0 11.4 -Round Trip via Suez 42.0 45.0 50.0 54.0 39.0 37.0 44.5 Round Trip via Cape 69.0 62.0 62.0 75.0 69.0 67.0 67.3 Round Trips per Year via Suez 8.7 8.1 7.3 6.8 9.4 9.9 8.2 Round Trips per Year via Cape 5.3 5.9 5.9 4.9 5.3 5.4 5.4 -Volume delivered in

169、2023(MMcm of natural gas)6,338 4,308 2,389 2,355 2,219 1,219 18,828 Volume delivered in 2024(MMcm of natural gas)3,858 3,127 1,927 1,696 1,254 673 12,534 Year-on-Year Decline(MMcm of natural gas)2,480 1,181 462 659 965 546 6,294 Source:Data on shipping distances and volumes delivered from Kpler.Calc

170、ulations by the author.Taking Rovigo as an example,2023 saw an average of 19.5 days between loading at Ras Laffan and discharging at Rovigo.For cargoes loaded at Ras Laffan in Jan-Feb 2024,currently en route via the Cape of Good Hope,and scheduled to arrive at Rovigo in Feb-Mar 2024,the one-way jour

171、neys are set to average 33 days an increase of 13.5 days over the journeys made via the Suez Canal in 2023.By doubling the number of days required to make the one-way trip(to make it a round-trip),plus three days in total at port at Ras Laffan and Rovigo,the round trip via Suez in 2023 averaged 42 d

172、ays,but this is set to rise to 69 days for trips via the Cape of Good Hope in since the cessation of LNG shipping via the Red Sea.This number of days per round trip suggest it was possible for each vessel to make 8.7 round trips in 2023,but this will fall 5.3 round trips per year via the Cape of Goo

173、d Hope.Rovigo received just under 6.4 Bcm of natural gas in the form of LNG form Qatar in 2023.If the number of round trips per vessel falls from 8.7 to 5.3,and the number of vessels bringing LNG from Ras Laffan to Rovigo remains constant,then the volume of LNG delivered to Rovigo could fall to 3.9

174、Bcm in 2024 a decline of 2.5 Bcm year-on-year.When this same set of calculations is applied to the other five European regasification terminals listed in Figure 14,the total volume of Qatari LNG received in 2023(18.8 Bcm)could fall by 6.3 Bcm(33 per cent),to 12.5 Bcm in 2024,if deliveries continue t

175、o be made via the Cape of Good Hope.Finally,given that the six regasification terminals listed in Figure 14 received 93 per cent of Qatari LNG supply to Europe in 2023,a 33 per cent reduction could see the total volume of Qatari LNG supply to Europe fall from 20.2 Bcm in 2023 to 13.5 Bcm in 2024 a r

176、eduction of 6.7 Bcm.5.6.Conclusions regarding Qatari LNG The calculations above suggest that,if the same number of vessels are used to bring Qatari LNG to Europe as in 2023,the longer round-trip times could see the volume of Qatari exports to Europe fall by 6.7 Bcm(4.9 mt)in 2024,which would equate

177、to around 6.1 per cent of Qatars total exports.At the 15 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.time of writing(26 February),the early indicators from LNG carrier vess

178、el tracking data show that Qatari cargo loadings destined for Europe are being sustained at a rate of 2-3 cargoes per week,down from 3-4 cargoes per week in 2023.This suggests that while most volumes are continuing to be delivered(albeit more slowly),some volumes are also being diverted to other des

179、tinations away from Europe.If a portion of Qatari cargoes are diverted from Europe to Asia,this will exacerbate the year-on-year decline in Qatari LNG deliveries to Europe caused by longer shipping times.These trends will become clearer in the coming weeks and months,if the Red Sea disruption persis

180、ts.If 25 per cent of Qatars 15.1 mt of exports to Europe in 2023 are diverted to other markets,this would imply a drop of 3.8 mt.If the remaining 11.3 mt is reduced by one-third due to longer round-trip times using a fixed number of LNG carriers,the volume of Qatari LNG supplied to Europe could fall

181、 to 7.5 mt.The overall impact would be Qatari LNG supply to Europe falling by half,while the total volume of Qatari LNG supplied to the global market would fall by 3.8 mt(just under 5 per cent of Qatars total exports in 2023).This alone would imply a decline in total gross global LNG supply of 0.9 p

182、er cent year-on-year.6.The impact on Russian LNG exports 6.1.Exports from Yamal LNG to Europe and Asia The geography of Russias LNG exports to Asia means that the cessation of LNG shipping via the Red Sea also has an impact on Russian LNG exports.Russia has two large-scale LNG export terminals:Sakha

183、lin-II on the island of Sakhalin in Russias Far East(which delivers exclusively to the Asian market)and Yamal LNG on the Yamal Peninsula in North-West Russia.Exports from Yamal are divided between Europe and Asia as destination markets.Since Yamal reached its full capacity in 2019,the share of Yamal

184、 in annual exports from Yamal and Sakhalin-II combined rose from 62 per cent in 2019-2020 to around 66 per cent in 2021-2023.21 6.2.The Northern Sea Route and trans-shipment in NW Europe for deliveries via Suez Deliveries to Europe accounted for 67 per cent of total exports from Yamal by destination

185、 in 2021,rising to 73-74 per cent in 2022 and 2023.Conversely,the Asian share stood at 33 per cent in 2021,but fell to 26-27 per cent in 2022 and 2023 in the context of higher European prices.Of the volumes delivered to Asia,52 per cent were delivered directly to Asia via the Northern Sea Route alon

186、g Russias Arctic coastline in 2021,with the share of the Northern Sea Route falling to 42-43 per cent in 2022 and 2023.Conversely,the share of Yamal exports to Asia delivered via the Suez Canal stood at 43 per cent in 2021,rising to 55 per cent in 2022 and 51 per cent in 2023.The share of other rout

187、es fluctuated between 3 and 7 per cent in 2021-2023.22 The deliveries from Yamal to Asia via the Suez Canal require trans-shipment.Sometimes this takes place at the Russian port of Murmansk,using the Saam Floating Storage Unit(since 2023).Otherwise,cargoes are delivered to European regasification te

188、rminals,namely Zeebrugge(Belgium)or Montoir(France)for ship-to-ship transfer.In addition,at Zeebrugge,the trans-shipment process means that cargoes are offloaded into the terminals storage tanks,and then reloaded onto other LNG carriers.In the case of both ship-to-ship and trans-shipment,ice-class L

189、NG carriers transport cargoes from Yamal LNG to Murmansk,Zeebrugge,or Montoir,with cargoes reloaded onto standard LNG carriers for onward delivery.For this reason,Russian LNG deliveries to Asia via Suez and the Red Sea are reported as deliveries from Murmansk,Zeebrugge,or Montoir to Asia.The Norther

190、n Sea Route is only passable during half the year,when ice cover is at its lowest.In 2023,this was between June and November.In 2021 and 2022,the navigation season also began in June but extended into December.It is also notable that 21 Data from Kpler LNG Platform.subscription required 22 Data from

191、 Kpler LNG Platform.subscription required 16 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.even when the Northern Sea Route is being used,Russian LNG continues to be delivere

192、d to Asia via the Suez Canal.23 Therefore,Yamal accounts for around two-thirds of Russias large-scale LNG exports(and 63 per cent of total Russian LNG exports).Deliveries to Asia account for 26-27 per cent of Yamal exports,meaning that Yamal deliveries to Asia account for 17-18 per cent of Russias l

193、arge-scale LNG exports.On an annual basis,the fact that 51-55 per cent of Yamal deliveries to Asia are made via Suez,means that again,on a purely annual basis around 9-10 per cent of Russias large-scale LNG exports are impacted by the Red Sea disruptions.However,it should be noted that this disrupti

194、on has a disproportionate impact in the period from December to May,when the shipment of LNG from Yamal to Asia via the Northern Sea Route is not possible.For example,in 2023,LNG shipments from Yamal to Asia via Suez ranged from 0.07 mt(August)to 0.44 mt(April).Therefore,while the impact of disrupti

195、on to Russian LNG shipments via the Red Sea will be most strongly felt in the coming months(February to May),the impact will not completely dissipate even once the Northern Sea Route navigation season begins in June.24 6.3.Yamal LNG export volumes by destination in 2023 In 2023,Yamal LNG exported 19

196、.9 mt of LNG,of which 14.6 mt(73 per cent)was delivered to Europe and 5.3 mt(27 per cent)to Asia.This equates to 0.28 mt per week to Europe and 0.10 mt per week to Asia.The four largest recipients of LNG from Yamal in 2023 were Spain(5.0 mt),Belgium(4.5 mt),China(4.1 mt),and France(3.6 mt)they accou

197、nted for 86 per cent(17.2 mt)of the total exports from Yamal LNG in 2023.Of the 4.5 mt delivered to Belgium at Zeebrugge,1.24 mt was reloaded onto LNG carriers chartered by Yamal LNG,0.44 mt onto LNG carriers chartered by PetroChina,which holds a long-term SPA with Yamal LNG,and 0.13 mt onto LNG car

198、riers chartered by Gunvor,which holds a term SPA with Novatek.25 The key point regarding exports from Yamal LNG is that the SPA with PetroChina(reportedly 3.0 mtpa DES from 2018 to 2040)is the only contract associated with the project that is certain to deliver to Asia,and is likely underpinning the

199、 continued deliveries from Yamal to China via the Cape of Good Hope.Figure 15:Yamal LNG exports by destination(mt per week)Source:Data from Kpler LNG Platform subscription required.Data up to week 12-18 February 2024.23 Data from Kpler LNG Platform.subscription required 24 Data from Kpler LNG Platfo

200、rm.subscription required 25 Data from Kpler LNG Platform.subscription required -0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 Europe Asia 17 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of

201、its Members.6.4.Yamal LNG exports since 12 January 2024 Recent cargo loadings illustrate the impact on Russian LNG flows to Asia,at a time when the Northern Sea Route is closed to navigation.Between 1 January and 25 February,48 cargoes were loaded at Yamal LNG,including 10 in the period 1-12 January

202、,and 38 in the period 13 January to 18 February.Of the ten cargoes exported in 1-12 January,seven were delivered to Europe,and three were transferred ship-to-ship for delivery to Spain(on the Shaolin),Taiwan(on the Yenisei River),and China(on the LNG Geneva).The Yenisei River reached the Strait of G

203、ibraltar on 15 January,before diverting to the Cape of Good Hope,while the LNG Geneva declared for Port Said(Suez Canal)on 8 January before updating to the Cape of Good Hope on 15 January.Of the 38 cargoes exported from 13 January to 25 February,two were transferred ship-to-ship for onward delivery

204、to Asia via the Cape of Good Hope.These were the Clean Vision(13 January)and Clean Horizon(17 January).The remaining 36 cargoes were shipped to Europe,mostly to Zeebrugge,Montoir,Dunkerque,or to one of several terminals in Spain,where only Zeebrugge saw any of those full-sized cargoes re-exported.In

205、 the period 1-12 January,two cargoes were re-exported from Zeebrugge after trans-shipment,both delivered to China via the Cape of Good Hope.The Trader ii and Lena River reached Port Said at the entrance to the Suez Canal on 12 and 15 January respectively,before turning around and sailing to Asia via

206、 the Cape of Good Hope.In the period 13 January to 25 February,two cargoes were re-exported from Zeebrugge to Spain,three to China,and one to Taiwan,all via the Cape of Good Hope.26 6.5.Shipping distances from Zeebrugge to Asia via Suez and Cape of Good Hope The impact on shipping distances due to t

207、hese diversions is substantial.The distance from Zeebrugge to Hong Kong via the Suez Canal is 9,800nm(25.5 days),but the journey to Hong Kong via the Cape of Good Hope is around 13,000nm(34 days)a 33 per cent increase over the Suez Canal route.27 Using real-world examples,cargoes that arrived in Chi

208、na from Zeebrugge in 2023 had an average journey time of 28 days,covering an average distance of 10,400nm.The first,and thus far only,cargo to deliver LNG from Zeebrugge to China departed Zeebrugge on 30 December 2023 and discharged its cargo in Qidong 37 days later,on 6 February,after a journey of

209、14,500nm.Cargoes that arrived in China from the Russian ship-to-ship transfer point in Murmansk faced average journeys of 38 days,or 13,800nm.This is compared to journeys of 9 days(2,750nm)from Yamal LNG to Zeebrugge.Given that Europe is so much closer to Yamal than Asia,it is hardly surprising that

210、 the majority of Yamal LNG exports are destined for the European market.However,it is worth recalling that in addition to the 3 mtpa SPA between Yamal LNG and PetroChina for supply from Yamal LNG,the Yamal LNG project company is 30 per cent Chinese-owned(20 per cent CNPC and 10 per cent Silk Road Fu

211、nd).The fact that LNG from Yamal continues to flow to Asia(China in particular)even when the Northern Sea Route is closed highlights the importance of contractual destination restrictions,which mean that cargoes must be physically delivered.It is for this reason that Russian cargoes from Zeebrugge a

212、re willing to make the long journey to Asia via the Cape of Good Hope,just as Qatari DES cargoes are willing to make the long journey to Europe,also via the Cape of Good Hope.6.6.The implications of longer shipping distances for Russian LNG As with the Qatari example,if it is assumed that there is n

213、o diversion of Russian cargoes destined for Asia to alternative markets,and the number of LNG carriers remains constant,the 2.7 mt of LNG delivered from Yamal LNG to Asia via the Suez Canal in 2023,and the 1.7 mt delivered from Zeebrugge,will face journeys that are,on average 9 days longer in either

214、 direction,adding 18 days to the round-trip.Assuming a total of three days in port for loading and unloading,for the cargoes from Yamal,this 26 Data from Kpler LNG Platform.subscription required 27 Data from Kpler LNG Platform.subscription required 18 The contents of this paper are the authors sole

215、responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.is an increase in the round-trip from 79 days to 97 days(+23 per cent)and for cargoes from Zeebrugge,an increase in the round-trip from 31 to 40 days(+29 per cent).For cargoes

216、from Yamal trans-shipped at Murmansk,a round-trip time of 79 days equates to 4.6 round trips per year,while the longer-round-trip of 97 days equates to 3.8 round trips per year(-17 per cent).For cargoes trans-shipped at Zeebrugge,a round-trip of 31 days equates to 11.8 round trips per year,while a r

217、ound-trip of 40 days equates to 9.1 round trips per year(-23 per cent).If all other factors are held constant,this would imply deliveries from Yamal to Asia via Murmansk declining from 2.7 mt in 2023 to 1.9 mt(-0.4 mt)in 2024 and deliveries from Yamal to Asia via Zeebrugge declining from 1.7 mt in 2

218、023 to 1.3 mt in 2024(-0.4 mt).Therefore,sustaining the re-routing from the Suez Canal to the Cape of Good Hope,without diverting cargoes to other markets,could see exports from Yamal LNG decline by 0.8 mt(4 per cent)year-on-year.7.The impact on North African LNG deliveries to Asia 7.1.North African

219、 LNG exports to Europe and Asia In 2023,Algeria and Egypt exported a combined 16.8 mt of LNG,down slightly from 17.3 mt in 2022.The volumes exported to Europe were relatively stable(14.35 mt in 2022 and 14.25 mt in 2023),as were the volumes exported to Asia(2.8 mt in 2022 and 2.4 mt in 2023)and the

220、Americas(0.16 mt in 2022 and 0.18 mt in 2023).Therefore,exports to Europe accounted for 83 per cent of North African LNG exports by destination in 2022,and 85 per cent in 2023.This suggests that,within those relatively stable exports,there is a limited volume(2.4 mt in 2023)of North African LNG that

221、 if diverted from Asia to Europe could offset the loss of some of the Qatari cargoes.The weekly export data suggests that the diversion of North African exports from Asia to Europe has already begun,as illustrated below.Figure 16:North African LNG exports by destination(mt per week)Source:Data from

222、Kpler LNG Platform subscription required.Data up to week 12-18 February 2024.7.2.The suspension of Algerian LNG exports to Asia?Algeria has two LNG export terminals:Bethioua and Skikda.In Q4 2023,Algeria delivered just three cargoes to Asia(China,South Korea,and India),of which two were delivered vi

223、a Suez and one via the Cape of Good Hope.The vessels used were the Shaolin,Gaslog Santiago,and Amberjack LNG.The Shaolin(controlled by PetroChina)left Bethioua on 5 November,passed through the Suez Canal on 12 November,discharged a cargo at Tianjin on 1 December,and then remained in Asia to reload a

224、 cargo elsewhere in China for onward delivery to Japan.The GasLog Santiago(controlled by GasLog)-0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 Europe Asia Americas Unknown 19 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Ox

225、ford Institute for Energy Studies or any of its Members.loaded at Bethioua on 12 November,travelled via the Cape of Good Hope(on 1 December),and discharged its cargo in South Korea on 24 December.It then headed south to load a cargo in Australia on 19 January for delivery to Asia.The Amberjack LNG(c

226、ontrolled by Cheniere)loaded a cargo at Bethioua on 19 November,passed through the Suez Canal on 25 November,and discharged its cargo in India on 7 December.It returned ballast via the Suez Canal on 16 December,but continued past Algeria to load a cargo at Sabine Pass on 2 January for subsequent del

227、ivery to Spain.Algerian LNG has not been delivered to Asia since the Amberjack LNG delivery to India loaded its cargo on 19 November.However,on 13 February,the Clean Destiny,loaded a cargo at Bethioua and declared for Chittagong(Bangladesh)and is currently(26 February)on route to the Cape of Good Ho

228、pe.7.3.The suspension of Egyptian LNG exports to Asia?Egypt has two LNG export terminals:Damietta and Idku.Exports from Damietta were halted from 25 May 2023 to 6 January 2024,while Idku saw just one cargo exported between 11 May and 6 October.In the period between 6 October 2023 and 11 February 202

229、4,just four Egyptian cargoes were exported to Asia(two to China and one each to South Korea and Pakistan)all in November-December 2023,all via the Suez Canal.These deliveries were made using three vessels.The first Adam LNG,controlled by Shell made a delivery to Pakistan via Suez,returned ballast vi

230、a Suez,and then made another trip via Suez to deliver a cargo to China.During its latter trip,it left Egypt on 21 December 2023,passed through Suez the following day,and discharged its cargo in China on 15 January.It then did not return to Egypt,but travelled south to Australia to load its next carg

231、o.The other two vessels that delivered Egyptian LNG to Asia in Q4 2023 the Bw Pavilion Leeara and Qogir,controlled by TotalEnergies passed(laden)through the Suez Canal on 8 and 18 December,and discharged their cargoes in China and South Korea on 4 and 13 January.The Bw Pavilion Leeara then travelled

232、 round the Cape of Good Hope to the US Gulf Coast to load its next cargo,while the Qogir travelled south to load its next cargo in Australia.These examples suggest that the shipping of LNG from North Africa to Asia has mostly halted,with deliveries via Suez generally not being replaced by longer del

233、iveries via the Cape of Good Hope.Secondly,a common element in these examples is that since December,vessels used to deliver LNG to Asia in November-December 2023 subsequently did not reload in North Africa,but were used by their controllers to load cargoes elsewhere,for deliveries that did not invo

234、lve traversing the Red Sea.This could be an early sign of those larger market participants,who have the ability to optimise their portfolios,starting to do so.This places North African LNG exports in contrast with supplies to Europe from Qatar and supplies to Asia from Russia,which are continuing bu

235、t via the Cape of Good Hope.7.4.Implications of North African cargo diversions In contrast to the re-routing of Qatari deliveries to Europe and Russian deliveries to Asia away from the Suez Canal to the Cape of Good Hope,the diversion of North African LNG cargoes from the Asian market to the Europea

236、n market does not imply any curtailment of supply to the global LNG market as a whole,on the basis of curtailed effective LNG shipping capacity.Furthermore,if the entire volume exported from North Africa to Asia in 2023(2.4 mt)is indeed diverted to Europe in 2024,this would offset around one-third o

237、f the potential 7.5 mt decline in Qatari LNG supply to Europe discussed earlier.At the same time,the fact that 3.8 mt of that decline in Qatari LNG supply to Europe in 2024 could be attributed to cargo diversions for sale in Asia,the increased Qatari supply to Asia would more than offset the loss of

238、 North African supply to Asia by 1 mt.From an inter-basin LNG market perspective,the loss of 2.4 mt of North African supply,the gain of 3.8 mt of Qatari supply,and the potential loss of 0.8 mt of supply from Yamal LNG would,when taken together,equate to a net gain of 0.6 mt year-on-year for the Asia

239、n market.Conversely,if Europe were to lose 7.5 mt of Qatari supply and gain 2.4 mt of North African supply,it would still find itself short by 5.1 mt year-on-year.Under such circumstances,it is possible that additional volumes would be sourced from the Atlantic Basin,primarily spot cargoes from the

240、United States and new supply from West Africa.20 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.8.Overcoming the inter-basin shipping premium 8.1.The potential for additional

241、Atlantic Basin supply to Europe Aside from Europe potentially receiving greater volumes from the United States,Russia(from Yamal),and from North Africa,the narrowing price spreads between Europe and Asia could see some volumes from elsewhere in the Atlantic basin(Trinidad&Tobago,Nigeria,Equatorial G

242、uinea,Cameroon,and Angola).In 2023,those countries exported a combined 14.06 mt to Europe,10.35 mt to Asia,and 5.16 mt to the Americas.As yet,diversions of(non-US)Atlantic Basin cargoes from Asia to Europe are not happening.While there has been growth in deliveries to the Americas from Trinidad&Toba

243、go,deliveries from Trinidad&Tobago to Europe have remained stable at a rate of three cargoes every five weeks since mid-August 2023.Deliveries from West Africa have been on a general decline from a high of 1.48 mt in February 2023 to 0.46 mt in October 2023,and have since recovered slightly to 0.6 m

244、t in January 2024.The most recent weekly data shows exports from West Africa to Europe in a range of 0.06-0.22 mt(one to three cargoes)per week since the beginning of November,with the exception being four cargoes(0.26 mt)in the first week of January 2024.Figure 17:Weekly LNG exports from non-US Atl

245、antic Basin suppliers by destination continent(mt per week)Source:Data from Kpler LNG Platform.Graph by the author.Non-US Atlantic Basin LNG suppliers are Trinidad&Tobago,Nigeria,Cameroon,Equatorial Guinea,and Angola.Data to 18-25 February.In terms of new supply in the region,two new projects in Wes

246、t Africa are set to launch in 2024.Tango FLNG,off the coast of the Republic of Congo,received first gas into the FLNG unit on 28 December 2023.The liquefaction capacity will be 1 Bcma(0.74 mtpa)from Q1 2024,and a second 3.5 Bcma unit is planned for 2025.The entire volume will be marketed by Eni.28 O

247、ff the coast of Senegal-Mauritania,the Greater Tortue Ahmeyim(GTA)project has a planned capacity of 2.3 mtpa.BP will be both the operator and sole offtaker from the project,with cargoes contributing to their global supply portfolio.The FLNG vessel,Gimi,arrived in situ on 15 February 2024.29 First ca

248、rgoes are expected from Q2 2024.Taken together,and assuming a ramp-up period that means they do not reach full capacity until mid-2024,these two could just over 1.5 mt of Atlantic Basin supply in H2-2024.28 Eni,2023.Eni started the gas introduction into Tango FLNG facility,Republic of Congo.Press Re

249、lease,28 December.https:/ 29 BP,2024.GTA LNG project reaches major milestone with arrival of FLNG vessel.Press Release,15 February.https:/ -0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.6002 Jan 202306 Mar 202308 May 202310 Jul 202311 Sep 202313 Nov 202315 Jan 2024 Europe Asia Americas 21

250、 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.The other new project that could influence the volume of LNG available to Europe is Arctic LNG 2 in north-western Russia.The pr

251、oject is planned to have three trains of 6.6 mtpa,and the first train is now complete,with Novatek reportedly beginning production.30 Novatek holds a 60 per cent stake in the project,while four foreign shareholders(CNOOC,CNPC,TotalEnergies,and the Japanese consortium of Mitsui and JOGMEC),each hold

252、10 per cent stakes.In December 2023,those foreign shareholders declared force majeure.31 The project cannot begin shipments until the issue of LNG carriers is solved,with western sanctions delaying,or preventing entirely,the provision of Arctic-class LNG carriers to the project.Even if the project d

253、oes launch in 2024,albeit at a reduced capacity due to the smaller-than-planned fleet of suitable LNG carriers,the sanctions against the project mean that Novatek is likely to face difficulties marketing its production in Europe.Setting aside Arctic LNG 2,the addition of 3 mtpa of West African suppl

254、y to the portfolios of BP and Eni could contribute to the wider possibility of portfolio players optimising their portfolios to bring more Atlantic Basin cargoes to the European market(thus avoiding the longer trip to Asia round the Cape of Good Hope),to offset the reduction in Qatari supply.8.2.Pot

255、ential for optimisation within portfolios and through trading While re-routing cargoes via the Cape of Good Hope will increase journey times and by extension reduce the volume of deliveries that can be made using a given number of LNG carriers,another means of overcoming the inter-basin shipping pre

256、mium imposed by longer journeys is the reallocation of LNG cargoes within supply portfolios,and trading around those portfolios.Several European portfolio players hold liquefaction capacity at Ras Laffan in Qatar,and/or DES supply contracts with QatarEnergy(Qatargas),but also hold capacity at other

257、liquefaction capacity in the Atlantic Basin(Shell,TotalEnergies,and Eni).For them,it could be possible to reallocate their Qatari cargoes to Asia and Atlantic Basin cargoes to Europe.This is more difficult for others,particularly utility buyers,with smaller supply portfolios primarily constructed to

258、 serve their home market,for whom a significant proportion of their supply is sourced from the holding of liquefaction capacity at Ras Laffan,and whose regasification capacity is only in Europe(such as Centrica,EDF,Edison,Endesa,OMV,Orlen,and RWE).For them,it could become necessary to trade around t

259、heir portfolios,buying and selling cargoes,rather than reallocating cargoes within their own portfolios.For other major suppliers that sell into both the Atlantic and Pacific Basins,there are also opportunities to reallocate cargoes within their portfolios or trade around those portfolios,buying car

260、goes in one basin and selling equivalent cargoes in the other basin.This will naturally involve other market participants,such as those focused on trading,such as Gunvor,Trafigura,and Vitol,who add liquidity to the market.The major driver of this activity will be shipping costs(based on charter rate

261、s and fuel costs)relative to the inter-basin price spreads,and the commercially-effective use of LNG shipping capacity.If the price spread is sufficiently narrow,and the shipping premium(in terms of both cost and use of shipping capacity)for moving cargoes from one basin to another is sufficient hig

262、h,the optimisation of portfolios is a logical commercial response.However,there are limits to which such optimisation if feasible.A significant proportion of term LNG SPAs have destination restrictions,meaning that cargoes must be delivered from Point A to Point B.Even if a portfolio player does wis

263、h to reallocate cargoes from one basin to another,or market participants wish to buy cargoes in one basin and sell equivalent cargoes in the other basin(thus effectively shipping from one basin to another on paper),they may face constraints in terms of cargo 30 uuk,A.,2024.Report:Production starts a

264、t Russias Arctic LNG 2 despite US sanctions.Offshore Energy,3 January.https:/www.offshore-energy.biz/report-production-starts-at-russias-arctic-lng-2-despite-us-sanctions/31 Soldatkin,V.,2023.Foreign shareholders freeze participation in Russias Arctic LNG 2-Kommersant.Reuters,25 December.https:/ The

265、 contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.size,delivery dates,prices,or even LNG spec.32 The extent to which all market participants are able to accommodate these constraint

266、s within their supply portfolios,or find counterparties with whom to trade despite these constraints,will determine the extent of the physical optimisation of LNG cargoes on the global market,in response to the inter-basin shipping premium.Finally,it is worth recalling that shipping distances are no

267、t the only determinant of LNG delivery destinations.If they were,even more US and Russian Yamal LNG would have been delivered to Europe rather than Asia prior to the current disruption in the Red Sea.As a consequence,even if the inter-basin shipping premium and narrower inter-basin price spreads res

268、ult in a greater degree of optimisation and trading than prior to the closure of the Red Sea,the optimisation will not be total.LNG carriers will continue to make long journeys round the Cape of Good Hope,from the United States and Russia to Asia,and from Qatar to Europe.Therefore,it is possible tha

269、t if a proportion of the pre-crisis inter-basin flows are subject to optimisation and trading,and a proportion endure the longer shipping routes,the two will,to a certain extent,offset one another.Indeed,the expectation that this will happen may be a further contributary factor in the lack of Europe

270、an and Asian price response to the physical disruption of LNG shipping.9.The market response 9.1.Decline and stabilisation of shipping rates According to data from Refinitiv,daily charter rates for LNG carriers(reported weekly)declined continuously from November 2023 to 19 January 2024,before prices

271、 stabilised.For a 160,000 m3 capacity Tri-Fuel Diesel-Electric(160k TFDE)LNG carrier,the daily rates declined from USD 150,000 per day in the Atlantic Basin and USD 180,000 per day in the Pacific Basin in the week commencing 24 November to USD 35,000 per day in the Atlantic Basin and USD 45,000 per

272、day in the Pacific Basin in the week commencing 19 January.Since then,prices have largely stabilised,standing at USD 41,000 per day in the Atlantic and USD 45,000 per day in the Pacific for the week commencing 16 February.33 This decline in shipping rates since November 2023 has been influenced by s

273、everal factors.Firstly,the global volume of floating storage(the volume of LNG held on LNG carriers that have been idling offshore for at least 10 days)fell from a peak of just over 2 mt on 21-24 October to 1.3 mt on 26 November,0.94 mt on 12-13 December,and 0.25 mt on 8 January.In Europe alone,the

274、floating storage fell from 0.78 mt on 4 November to zero on 3-8 December.This unwinding of LNG shipping capacity being used as floating storage effectively increased transportation capacity,pushing down charter rates.At the same time,the diversion of a significant proportion of US LNG exports from A

275、sia to Europe(as discussed above)since the end of July 2023,back to ratios seen in the first four months of 2023,has reinforced the price-driven shift in US LNG exports from Asia to Europe that was seen in 2022.Because the distance from the US to Europe is so much shorter,shipping capacity is being

276、used more effectively.This trend has been augmented by the impact of LNG shipping from North Africa being diverted from Asia to Europe since December 2023,again with the impact of more efficient use of shipping capacity.The fact that shipping rates in early February 2024 were back at levels last see

277、n in May 2023 may also reflect LNG shipping rates simply bottoming out,with current Atlantic Basin rates of around 40,000 USD/day well within the range of 30,000-70,000 USD/day seen as monthly averages in February in each of the past five years(2019-2023).The fact that charter rates have not spiked

278、may reflect a cautious response from charterers,as they refrain from leasing new capacity until they are more certain that the present disruption in the Red Sea will persist for some time and that the re-routing justifies the leasing of such additional shipping capacity.32 Such as the balance betwee

279、n pure methane,other hydrocarbons(such as propane and butane),and other gases(such as nitrogen and carbon dioxide).This balance will be reflected in the Gross Calorific Value of the cargo.33 Data from Affinity Charter Rate Assessments(Weekly USD/Day),via EIKON Refinitiv subscription required.23 The

280、contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.9.2.Benchmark gas prices showing muted response to Red Sea disruption During the early phase of the disruption in the Red Sea,betwee

281、n mid-November and mid-January,European benchmark gas prices continued their decline,as they continued to fall back from the mid-October spike that followed the Hamas attack on Israel and the Israeli military response in Gaza.As illustrated below,TTF forward prices followed a downward trend from 23

282、October to 17 January.Despite the onset of the US-UK air strikes from 12 January,and the complete cessation of LNG shipping through the Red Sea from that date,European benchmark gas prices have continued the decline that began in late October 2023.TTF forward prices that reached a winter peak of ove

283、r 18 USD/MMBtu on 23 October fell consistently below 10 USD/MMBtu from 15 January,below 9 USD/MMBtu from 7 February,and below 8 USD/MMBtu from 13 February.Figure 18:TTF prices by month of delivery since 1 September 2023(USD/MMBtu)Data source:Argus Direct subscription required The fact that prices ha

284、ve been either stable or falling in recent weeks suggests that other bearish demand-side factors,such as relatively mild weather as Europe moves closer to the end of winter,substantial European gas storage stocks for the time of year,and macro-economic headwinds that lend credence to an outlook of o

285、nly modest recovery in industrial gas demand,along with the stabilisation of European LNG imports from the United States at a sustained high level,are allowing the European market to remain sanguine,and prices to reflect that market sentiment.The landed price of LNG in North-Western Europe(reported

286、by Argus)surpassed 8 USD/MMBtu on 30 April 2021,fell briefly below that level on 19 May 2021,and then did not fall below 8 USD/MMBtu again until a run of seven consecutive trading days from 24 May to 2 June 2023.Prices rose above 8 USD/MMBtu thereafter,and did not fall below 8 USD/MMBtu until 9 Febr

287、uary 2024.It therefore appears that Europe is on the cusp of landed LNG prices being sustained below 8 USD/MMBtu for the first time since April 2021,that is,before the start of the European gas price crisis.In North-East Asia,the delivered price of LNG reported by Argus since January 2023 has follow

288、ed the same trajectory as the landed price of LNG in North-Western Europe,with prices below 9 USD/MMBtu since 15 February 2024 the first sustained period of prices below 9 USD/MMBtu since April 2021.13 Oct,18.14 23 Oct,18.24 12 Jan,10.21 23 Feb,7.39 05 Oct,13.28 -2.00 4.00 6.00 8.00 10.00 12.00 14.0

289、0 16.00 18.00 20.0001 Sep08 Sep15 Sep22 Sep29 Sep06 Oct13 Oct20 Oct27 Oct03 Nov10 Nov17 Nov24 Nov01 Dec08 Dec15 Dec22 Dec29 Dec05 Jan12 Jan19 Jan26 Jan02 Feb09 Feb16 Feb23 FebJan 2024Feb 2024Mar 2024Apr 2024 24 The contents of this paper are the authors sole responsibility.They do not necessarily re

290、present the views of the Oxford Institute for Energy Studies or any of its Members.Figure 19:Argus price assessments for LNG delivered to NE Asia&NW Europe(USD/MMBtu)Data source:Argus Direct subscription required 9.3.Europe-Asia spreads remain relatively narrow Due to the curtailment of LNG shipping

291、 via the Panama Canal and Red Sea,two of the worlds largest LNG exporters face an inter-basin shipping premium in reaching what may be considered their secondary markets(US LNG to Asia and Qatari LNG to Europe).Despite this,there has not been a spike in LNG benchmark prices in Europe or Asia.Instead

292、,the decline in both benchmarks between November and February has allowed the differential to narrow to a level that is usually considered sufficient to attract LNG cargoes to the Asian market(around 1.00-1.50 USD/MMBtu).Yet prices remain high enough to absorb the extra shipping costs generated by l

293、engthy detours around the Cape of Good Hope.Indeed,it may take prices falling further to motivate a greater degree of optimisation to reduce physical flows between the Atlantic and Pacific Basins.Figure 20:Premium of Argus North-East Asia LNG delivered price assessment over Argus North-West Europe L

294、NG delivered price assessment(USD/MMBtu)Data source:Argus Direct subscription required 23 Feb 2024,7.00 23 Feb 2024,8.29 -5.00 10.00 15.00 20.00 25.0003 Jan202303 Feb202303 Mar202303 Apr202303 May202303 Jun202303 Jul202303 Aug202303 Sep202303 Oct202303 Nov202303 Dec202303 Jan202403 Feb2024 NW Europe

295、 NE Asia14 Dec 2023,0.90 03 Jan 2024,1.40 12 Jan 2024,0.79 23 Feb 2024,1.29 (2.00)(1.00)-1.00 2.00 3.00 4.0002 Oct 202323 Oct 202313 Nov 202304 Dec 202325 Dec 202315 Jan 202405 Feb 2024 25 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of t

296、he Oxford Institute for Energy Studies or any of its Members.10.Waves of impact:measuring LNG at the point of import,not export 10.1.First wave:cargoes diverted Overall,the early indicators since 12 January 2024 are that to a significant extent,those commercial entities that are shipping LNG cargoes

297、 from Qatar to Europe,North-Western Russia to Asia,and the United States to Asia(the latter via a non-Panama Canal route),who have all ceased to deliver cargoes via the Red Sea,appear to be willing to re-route those deliveries via the Cape of Good Hope.The exception is supply from North Africa to As

298、ia,which has now mostly halted.For example,weekly Qatari LNG exports destined for Europe remain in a corridor of 0.2-0.4 mt per week,as they were for much of 2023.Likewise,the weekly volumes of US LNG exports intended for delivery to Asia(also 0.2-0.4 mt per week)are back in the range seen for much

299、of the period from January to May 2023,albeit a decline from peaks seen in June-July.34 In terms of delivery routes not affected by the Red Sea disruption,Qatari LNG supply to Asia and US LNG supply to Europe in late January 2024 were notably higher than in early October 2023(before the first disrup

300、tions began),but were not significantly higher than in late December 2023.This suggests that the share of cargoes being delivered by longer routes round the Cape of Good Hope(from the US to Asia and from Qatar to Europe)as a proportion of total LNG exports from the US and Qatar has fallen since Octo

301、ber but is stable relative to December 2023.Therefore,the first wave of impact of the Red Sea disruption was visible in the vessel-tracking data,as cargoes were re-routed away from the Red Sea in mid-January.10.2.Second wave:late arrival of re-routed cargoes Regarding European LNG imports from Qatar

302、 and Asian imports from the United States and Russia,as measured at the point of arrival,the second wave impact was likely to be felt several weeks later,from late January to late February and early March,due to the longer time it takes to deliver those cargoes via the Cape of Good Hope,and so it pr

303、oved.Taking the specific case of Qatari LNG deliveries to Europe,and the extension of the journey time from an average of 17 days via the Suez Canal to 29 days via the Cape of Good Hope,the next wave of impact was always likely to be felt from late January onwards.That is the time period in which ca

304、rgoes that left Ras Laffan between 7 and 29 January,having expected to undertake journeys via the Suez Canal of around 17 days and arrive in Europe between 24 January and 15 February,instead have taken journeys of 29 days via the Cape of Good Hope to arrive in Europe between 5 and 27 February.In eff

305、ect,the period from late January to late February is the first month in which a group of Qatari cargoes to Europe effectively arrived,on average,12 days late.A real world example of this is the delivery of Qatari LNG to Rovigo,Italy(the largest European destination for Qatari LNG in 2023).The expect

306、ed journey times(estimated by Kpler,based on a speed of 16 knots)are 12 days via the Suez Canal and 31 days via the Cape of Good Hope.Three cargoes left Ras Laffan on 11,16,and 26 January,destined for Rovigo.They should therefore have arrived on 23 January,28 January,and 7 February.Instead,re-routed

307、 via the Cape of Good Hope,those cargoes arrived on 12,18,and 24 February(17-22 days late).This dynamic is already visible in the data on weekly European LNG imports by source,and the three-week rolling average of those weekly imports:the week commencing 29 January was the first since December 2016(

308、and only the sixth such week since January 2008)that Europe did not receive a single LNG cargo from Qatar in a calendar week,while the late-arriving cargoes are visible from the week commencing 5 February.35 36 34 Data from Kpler LNG Platform.subscription required 35 Europe is defined as the EU-27 p

309、lus UK.Turkey received just one LNG cargo from Qatar in 2022,and none since then.36 Data from Kpler LNG Platform.subscription required 26 The contents of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of it

310、s Members.Figure 21:EU plus UK weekly LNG imports by source(mt per week)Data from Kpler LNG Platform subscription required.Data up to 19-25 February 2024.Figure 22:EU plus UK LNG imports by source three-week rolling average(mt per week)Data from Kpler LNG Platform subscription required.Data up to 19

311、-25 February 2024.10.3.Third wave:impact of longer round-trips At the time of writing(26 February),the next,third wave of impact on Qatari volumes to Europe will soon be felt,as Qatari LNG carriers arrive back at Ras Laffan for reloading after complete round trips to Europe and back via the Cape of

312、Good Hope.The eight Qatari LNG carriers that have already made deliveries to Europe via the Cape of Good Hope are due back at Ras Laffan between 5 and 24 March for their delayed re-loadings.In this third wave,the longer round-trip times for each delivery will delay the next cargo loading,and then de

313、lay the arrival of the next cargo from Qatar to Europe even further.For example,while a hypothetical cargo loaded at Ras Laffan on 10 January,delivered via the Suez Canal and arriving at Zeebrugge on 27 January,would spend a day in port and then make the return journey to arrive back at Ras Laffan o

314、n 14 February.There it could spend two days in port to reload,and then make another 17-day journey to Zeebrugge,delivering a second cargo on 5 March.-0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.6002 Jan202302 Feb202302 Mar202302 Apr202302 May202302 Jun202302 Jul202302 Aug202302 Sep202302 Oct202302 Nov20230

315、2 Dec202302 Jan202402 Feb2024 United States Qatar Russia North Africa-0.20 0.40 0.60 0.80 1.00 1.20 1.4002 Jan202302 Feb202302 Mar202302 Apr202302 May202302 Jun202302 Jul202302 Aug202302 Sep202302 Oct202302 Nov202302 Dec202302 Jan202402 Feb2024 United States Qatar Russia North Africa 27 The contents

316、 of this paper are the authors sole responsibility.They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.Now consider a second hypothetical cargo,also loading at Ras Laffan on 10 January,which travels via the Cape of Good Hope,delivers its cargo

317、 to Zeebrugge 12 days late,on 8 February.After a day in port,the return journey would see that vessel arrive back at Ras Laffan on 10 March.After another two days in port reloading before departing on 12 March,and another 29-day journey via the Cape of Good Hope,that vessel would deliver a second ca

318、rgo to Zeebrugge on 10 April 36 days later than the second cargo delivered by the first hypothetical vessel that was able to traverse the Suez Canal.This effect will become more and more pronounced with every subsequent cargo.Assuming both that the Red Sea disruption persists,and that the number of

319、LNG carrier plying the routes between the Atlantic and Pacific Basins remains unchanged,this ripple effect is likely to become increasingly visible in data on European and Asian LNG imports by source from February-March onwards.Specifically,it will be visible as a reduction in Qatari supply to Europ

320、e,and supply to Asia from the United States,Russia,Algeria,and Egypt.The longer the Red Sea disruption lasts,the longer this third wave of impact will last,and the greater its cumulative effect will be.11.Implications for Europe and the global LNG market 11.1.Impact on Europe of reduction in Qatari

321、LNG supply Thus far,this paper has demonstrated that Qatari LNG cargoes are continuing to flow to Europe,albeit via longer routes and with some cargoes possibly diverted to Asia.If the Red Sea disruption persists for the rest of the year,the supply of Qatari LNG to Europe(15.1 mt in 2023)could be re

322、duced by 25 per cent(3.8 mt)due to diversions to Asia,and the remaining 75 per cent(11.3 mt)could be reduced by one-third(to 7.5 mt)due to longer round-trip times using a fixed number of LNG carriers.Overall,the impact would be Qatari LNG supply to Europe declining by 7.6 mt,from 15.1 mt to 7.5 mt.R

323、egarding other suppliers,the cessation of LNG deliveries from North Africa to Asia,with those cargoes redirected to Europe,could imply an additional 2.4 mt of LNG supply for Europe in 2024.Elsewhere,Europe is already the primary market for Russian LNG from Yamal,with the volumes to Asia continuing,i

324、n particular under DES contracts for delivery to China.The United States already set a new record for annual LNG exports to Europe in 2023(56 mt),and every month from October 2023 to January 2024 was a record for that month.Those records reflected both the growth of US LNG exports to record levels a

325、nd a rising share of Europe in those exports,in the broader context of curtailments of LNG shipping via the Panama Canal.In 2023,Europe accounted for 70 per cent of exports from the United States to Europe and Asia combined,with Europes share rising to 73 per cent in December 2023 and 78 per cent in

326、 January 2024.Quite how much more the United States has to offer Europe depends on the contracts and destination commitments of those offtaking LNG from US export plants,and the extent to which volumes remain committed to the Asian market.Finally,Atlantic Basin supply from sources other than the Uni

327、ted States do not yet appear to be diverting from Asia to Europe,although two new projects in West Africa will add new supply of around 1.5 mtpa to the Atlantic Basin(most likely to Europe)via the portfolios of BP and Eni in the second half of 2024.Therefore,in 2024 as a whole,new supply from West A

328、frica and diversions from North Africa could offset up to 4 mt of the potential 7.5 mt reduction in Qatari supply to Europe.In terms of European total gas supply(measured in Bcm),that loss of 3.5 mt equates to 4.8 Bcm across the year as a whole.In the next several months before the new West African

329、supply arrives,the implication is that all other factors being equal more gas will be withdrawn from European storage in February and March.If this proves to be the case,a greater volume of storage stocks will need to be replenished in the summer of 2024,at a time when new LNG supply from West Afric

330、a will help to offset lower volumes from Qatar.The fact that a 4.8 Bcma drop in LNG supply to Europe in 2024 equates to 1.3 per cent of a European(EU-27 plus UK)market that consumed 380 Bcm in 2023 may explain why the market has not reacted more strongly to the curtailment of Qatari LNG supply to Eu

331、rope.In the very near term,considering the period out to the end of winter on 31 March,it helps that European storage stocks remain at robust levels:stocks of 68.3 Bcm on 24 February are slightly higher than the 28 The contents of this paper are the authors sole responsibility.They do not necessaril

332、y represent the views of the Oxford Institute for Energy Studies or any of its Members.two previous records for that date(65.9 Bcm in 2020 and 65.8 Bcm in 2023).37 Such stocks provide a buffer that allows quicker withdrawals to offset lower Qatari LNG supply.The European market is also cushioned by

333、receiving more US LNG throughout the second half of 2023 than might otherwise have been the case,due to the curtailments at the Panama Canal.11.2.Could a reduction in Qatari LNG exports notably tighten the global LNG market?A key issue raised in this paper is whether longer round-trip times via the Cape of Good Hope,while the number of available LNG carriers remains constant,could effectively curt