France to attract more LNG from the United States amid tight PEG / EAX diffusion

France to attract more LNG from the United States amid tight PEG / EAX diffusion

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LONDON (ICIS) – French LNG terminals are expected to continue attracting LNG cargoes from the United States this summer, thanks to a growing PEG premium in the first month of the Henry Hub and tight spreads between French PEG prices and Asian LNG.

The United States has so far been France’s primary source of LNG supply in March and April, accounting for over 30% of total LNG imports in March and 37% in the first half of April.

The PEG May ’21 contract was found again in recent sessions after falling $ 0.7 / MMBtu below the first month’s ICIS East Asia (EAX) index on April 9.

On April 15, the PEG contract for the first month reduced its discount on the EAX to just $ 0.3 / MMBtu, while it increased its premium for the first month in the US Henry Hub to $ 4.45 / MMBtu .

The EAX for delivery in May and June also increased slightly over the past week, due to faster demand from Asian buyers like India, South Korea and China.

PEG prices rose further as carbon and coal volatility, below-average temperatures and low wind generation supported European gas products in week 15, which helped close the market. delivery of the PEG for the first month to the EAX.

Higher PEG incentive prices slowed injections at the start of the gas summer, with net withdrawals occurring from April 6 to 15.

For this reason, demand for injection this summer is expected to be higher than expected, as heavily depleted stocks were again emptied at the start of the summer. According to traders surveyed by ICIS, LNG imports during the summer months are expected to meet higher injection demand expected this year.


While cargoes from producers in the Middle East like Qatar would still find it more convenient to deliver to Asia than to Europe due to higher Asian prices and lower shipping costs, France would be more attractive for LNG ships. Americans.

According to the LNG Edge Arbitration Calculator, a shipment from Corpus Christi in the United States should cover a transport cost of at least $ 1.31 / MMBtu to reach India, and even more to be delivered to China. , Japan or South Korea. The same ship, however, would just need to cover a cost of $ 0.58 / MMBtu to reach France.

At current prices, US shippers could potentially benefit from a margin of $ 3.61 / MMBtu if they deliver to the southern France terminals of Fos Cavaou and Fos Tonkin. The margin would increase to $ 3.65 / MMBtu if they deliver to the Dunkirk terminal and up to $ 3.66 / MMBtu if they deliver to Montoir de Bretagne.

Likewise, CIHI analysts estimate that the cost of transporting LNG from Nigeria – which is also one of the main LNG suppliers to France – is around $ 0.47 / MMBtu when it would be around $ 0.47 / MMBtu. about $ 1.05 / MMBtu to go to Japan. Therefore, even if the cost of gas in France is lower than in Japan, for Nigerian cargoes it would still be practical to go to France, as long as the French discount in Japan remains below $ 0.58 / MMBtu .


LNG imports are likely to remain France’s main source of supply in April, as volumes imported by pipeline could be constrained by planned Norwegian maintenance.

Offshore operator Gassco said planned maintenance at several factories would hamper upstream supply until the end of the month. This could potentially affect incoming flows at the Dunkirk interconnection point (IP), France’s main source of supply by pipeline.

The abundant arrivals of LNG to French terminals should continue to play a central role in the weeks to come after the record imports recorded in March, which led France to become the leading European importer of LNG.

On April 16, data from LNG Edge suggested that US LNG cargoes should also lead the way in the rest of April, with seven out of 10 LNG ships due to dock at French terminals by the end of the month coming from the United States.

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