The European premium: TTF has been successfully outcompeting Asian LNG spot prices in recent months, allowing for a record LNG inflow through the heating season.
When looking at the forward curve, TTF is set to retain a hefty premium of $6/mmbtu over JKM through 2022, with the European premium fading away only by Q2 2023.
A $6/mmbtu premium would be enough not only attract all the flexible and spot cargoes in the Atlantic basin, but could also pull away some spot cargoes from the Pacific basin, with diversions from
Asian markets.
High restocking needs are likely to support Europe’s thirst for LNG this summer: storage injections would need to be ~20% above their 5y average (over 65 bcm bcm) to reach the EU’s target to fill storages up to 90% by 1st October.
Second, the drive away from Russian gas, including due to the expiry of long-term contracts, will further enhance the competition on the LNG scene.
The ultimate question is of course how much additional LNG Europe and the EU could attract this year and whether the current wide TTF-JKM spread can be maintained through the year?
What is your view? how will the competition for summer gas play out? how much additional LNG can Europe import this year? and what does this mean for Asian gas demand?
Source: Greg Molnar (LinkedIn)
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