More tankers carrying liquefied natural gas are diverting towards Asia as buyers scramble for replacement cargoes after the Middle East war halted tanker traffic through the Strait of Hormuz and disrupted supplies from Qatar, the world’s second-largest seller of the fuel.
Shiptracking data by analytics firms Kpler and LSEG show three LNG tankers diverting towards Asia so far.
Carrying U.S. cargoes from the Plaquemines and Corpus Christi LNG terminals, respectively, the Simsimah and Clean Mistral tankers pivoted toward the South Atlantic on March 4 after heading northeast towards Europe. Earlier this week, the BW Brussels, carrying a Nigerian cargo from Bonny LNG, pivoted away from its initial Atlantic-bound course on March 3, and is now Asia-bound via the Cape of Good Hope.
The price of the U.S. Henry Hub gas benchmark was $2.97 per million British thermal units on Thursday versus $17.01 per mmBtu for the European Title Transfer Facility (TTF) benchmark and $15.495 per mmBtu for the Japan-Korea Marker, the Asian benchmark.
The higher European and Asian prices are more than enough to offset the cost of longer distances to move the cargoes to Asia.
“Cargoes have started to be diverted to Asia, away from Europe in recent days, and the prevailing JKM-TTF spreads, averaging much above the U.S. shipping differentials, indicate flexible U.S. cargoes will likely start to come to Asia on stronger netbacks,” said Energy Aspects analyst Kesher Sumeet.
While some Asian buyers are delaying spot purchases or not awarding tenders due to elevated prices, others are paying up to secure cargoes.
“Buyers from South Korea, India, Taiwan, Bangladesh, and Thailand have been seeking replacement spot cargoes, though many remain hesitant to award tenders due to high prices or a lack of offers,” said Sumeet.
“India and Bangladesh are reportedly securing spot cargoes above $20 per mmBtu, but the volumes awarded remain well below the levels impacted due to Qatari disruptions,” he said, adding that Asian buyers will unlikely be able to replace all the lost Qatari cargoes for March and April. Bangladesh has secured two spot cargoes from Gunvor and Vitol at $28.28 per mmBtu and $23.08 per mmBtu, respectively.
Additionally, a power utility in western Japan is seeking replacement cargoes after previously expecting deliveries from Qatar beginning in June 2026, while another major Japanese utility has been seeking prompt cargoes amid growing concerns that supply availability for late March and early April delivery may tighten, said Rystad Energy analyst Masanori Odaka.
Cargo diversions could intensify competition between the Atlantic and Pacific basins. Asia takes more than 80% of Qatar’s LNG exports, and Europe is increasingly relying on LNG to fill gas storage since the region halted most Russian pipeline gas imports after Moscow’s full-scale invasion of Ukraine.
While global front-month arbitrage was open to Asia earlier this week, the U.S. front-month arbitrage firmly pointed to Europe on Thursday, as high freight prices and a falling JKM-TTF spread make Europe more competitive, said Spark Commodities analyst Qasim Afghan.
(Reporting by Emily Chow; Editing by Christian Schmollinger)