Egypt has halted all LNG exports from May onwards to meet is domestic needs, according to local media, in light of reduced gas production and heightened summer demand.
The country has switched to imports for the first time since 2018, and was reported to have imported two prompt cargoes from Vitol and Trafigura , one of which was delivered April 13 at Jordan’s Aqaba terminal.
This delivery marked the first reported usage of the Suez Canal since January, when LNG players steered away from using the route due to geopolitical risks in the Red Sea region following a string of attacks on commercial ships crossing the Bab al-Mandab Strait by Houthi rebels in Yemen since October 2023.
However, risks in the region are still looming and no ship is yet recorded to be transiting northbound via the canal to Europe.
The imports into Egypt are hence expected to command a risk premium which is providing support to the price strength in the Atlantic as sellers wait to supply into the much-anticipated Egyptian demand.
“Yeah, I think Suez itself is fine. it’s the Gulf of Aden that is still an issue, so you can go southbound through the Suez to Egypt but there still hasn’t been cargoes going northbound from the Middle East to Europe,” David Lewis, LNG analyst at S&P Global Commodity Insights said.
Platts, part of S&P Global Commodity Insights, assessed the US Gulf Coast LNG freight rate to Japan/Korea via the Suez Canal at $2.23/MMBtu on April 23, down 2 cents/MMBtu on the day.
The freight rate was 12 cents/MMBtu higher than the route round the Cape of Good Hope and 69 cents/MMBtu higher than the cheapest route, via the Panama Canal.
On the pipeline side, European market participants have been closely monitoring Egyptian LNG as a determinant of pipeline gas prices in Europe.
“Aside from US feedgas deliveries, I think that the thing to watch for this summer is how much LNG is Egypt importing.
“It seems that they might be importing more than I expected, and this is likely to increase the tightness of LNG supply into Europe, which can be bullish for the TTF,” a UK-based gas analyst said.
In recent events, Egypt’s state-owned gas company EGAS issued a buy tender for one cargo, to be delivered between May 18-19, 2024. The tender will close at 1 pm Cairo time on April 24.
Source: Spglobal.com
