For Europe＇s LNG Ports, Russia Gas Fears and U.S. Exporters Buoy Demand

Gas buyers nervous of Russia cutting supply are helping solve Europe's problem of too many underused liquefied natural gas (LNG) terminals, as they seek space at France's Dunkirk plant. Adding to renewed demand is the more potent interest of major east Asian companies, shipping LNG from the booming output of their U.S. projects but fearing a saturated Asian market where they also face competition from Australian producers. Many European import terminals faced idling because of falling deliveries, but the combination of growing uncertainty over Russian supply and the U.S. shale revolution has jolted demand for them, raising options for diversifying gas supplies.

From one side, some European energy firms are showing interest in purchasing import rights at France's under-construction Dunkirk once it becomes operational in 2015, for periods spanning one-to-two years, a commercial source at the EDF-led project told Reuters. "The Ukraine-Russia crisis has stimulated interest in Dunkirk capacity in the short to medium term and also attracted interest in more tailored and flexible options," he said, although not for this winter as the terminal is not ready. Russia is Europe's biggest supplier of natural gas and its pipelines through Ukraine are a political focus as Europe imposes a new round of sanctions against Moscow. With about half of Europe's Russian gas piped through Ukraine, a disruption would cause prices to spike and in eastern Europe likely cause power and heating outages. As a stop-gap measure, the European Union is considering banning the re-export of LNG cargoes that unload in its ports for this winter, but a more lasting solution to rising dependency on Russian gas could come from across the Atlantic.

 ASIAN-U.S. LNG EXPORTERS As the United States gears up to start exporting LNG from 2016, big Asian handlers such as Japanese trading houses Mitsui and Mitsubishi want to book mid- to long-term import rights at European ports as fallback options if demand in their home markets sours, several industry sources told Reuters. "The Asian buyers of U.S. LNG, mostly led by the Japanese, are basically looking at European terminals as a place to dump cargoes if the shipping economics with Asia dry up," a source familiar with the talks said. The early stage inquiries also centre around buying options to deliver, and not just booking firm capacity. （economictimes.indiatimes.com by Topco)