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By Marwa Rashad
LONDON, Dec 19 (Reuters) – Several shipping companies and a few liquefied natural gas (LNG) tankers have decided to avoid the world’s main East-West trade route, following attacks launched by Yemen’s Houthi group on commercial ships at the southern end of the Red Sea.
The attacks raised the specter of additional disruptions to foreign industry following the turmoil of the COVID pandemic and prompted a U. S. -led foreign force to patrol waters near Yemen.
IS THE RED SEA ROUTE IMPORTANT FOR THE LNG MARKET?
The attacks made the Suez Canal more dangerous.
Around 12% of global maritime traffic will pass through the canal and between 4% and 8% of global LNG cargoes will pass through it by 2023.
This year, a total of 16. 2 million metric tons (MMt), or 51% of LNG trade, transited from the Atlantic basin eastward through the Suez Canal, while 15. 7 million tons transited the canal from the western Pacific basin, according to S.
WHO ARE THE MAIN SHIPPERS THROUGH THE ROUTE?
Qatar, the United States and Russia are Suez’s top active carriers.
Qatar is the largest active freight carrier from Eastern Europe to Europe, but accounts for around 5% of net imports from the EU and the UK.
“Qatar is actually the only east-west exporter of the Suez Canal. You can count on one hand the number of cargoes from Oman and the United Arab Emirates to Europe this year,” said LNG analyst Robert Songer. to date the intelligence company ICIS.
A chosen direction to Europe via the Cape of Good Hope could increase the number of Qatari days by 145%, or an additional 22 days on a round trip. For LNG to Asia, Qatar leads the way, followed by the United States. The United States, which has recently used the Suez Canal as an alternative to the Panama Canal.
ICIS’ Purger said U. S. -based Cheniere Energy owns four tankers that were designed to avoid the Panama Canal because they are too giant and therefore pass through Suez.
ARE PRICES IMPACTED? Spot prices in Asia currently stand at $12. 3, equivalent to millions of British thermal units (mmBtu) and have remained so since the attacks began.
High inventories in Europe and North Asia are limiting demand and are expected to reduce spot value growth in the first part of 2024.
HOW MARKET PLAYERS SEE THE RISK?
Market participants believe that LNG trading is unlikely to be affected and that any disruption will not have a major impact on global supply.
European gas prices saw a short-lived rebound on Monday on concerns over supply disruption from Qatar but had fallen back by Tuesday.
Most U. S. shipments, if headed to China/Asia, could only experience a short-term delay if the shipments were diverted.
“The physical hazards related to the transit of Suez LNG are aimed more at maintaining supply from the Atlantic to Europe than at maintaining supply from the Atlantic to Europe.
prevent Qatar from reaching Europe,” said Jake Horslen, senior LNG analyst at Energy Aspects.
Japan Gas Association (GAM) President Takahiro Honjo told a news conference that while there are risks, “I don’t think there will be a source crisis anytime soon. “
Honjo, who is also chairman of Osaka Gas Co. , said that given the congestion at the Panama Canal, LNG corporations have several options, adding the exchange between Europe and Asia.
(Reporting by Marwa Rashad in London; additional reporting by Emily Chow and Aizhu Chen in Singapore and Yuka Obayshi in Tokyo; editing by Lesanna Twidale and Ed Osmond)