Middle East LNG turmoil: vessels divert to Asia, Qatar charters out tonnage, rates hold high

Meanwhile, average LNG spot charter rates have eased from the US$300,000-per-day peak but remain high in six-digit figures, as QatarEnergy appears to be chartering out empty ships that cannot return to Qatar.

Market intelligence provider ICIS shared data with Riviera showing 10 major LNG carrier diversions since 3 March. Seven vessels changed course from Europe to Asia, one within Asia, another within Europe, and one from Brazil to Europe.

Most vessels now diverting from Europe to Asia are carrying US-sourced cargoes, while three are transporting Nigerian volumes.

“We expect to continue seeing cargoes switch destinations, both within regions like Europe and between regions, such as from Europe to Asia. Major traders are working to optimise their portfolios to adapt to the rapidly changing situation,” ICIS senior LNG analyst Alex Froley told Riviera.

Drewry Maritime Research lead LNG shipping analyst Pratiksha Negi previously told Riviera that, with Qatar halting production, countries including India, Japan, South Korea, and Taiwan are likely to increase US imports, with African cargoes potentially rising as well.

However, Mr Froley noted that the price gap between Europe and Asia has narrowed. Asia was once up to US$6/MMBtu higher than Europe, but it is now only around US$1/MMBtu more.

“That could still attract some cargoes, but the gap is closing as Europe raises its prices to compete more effectively for supply,” Mr Froley explained.

Rates cool but remain high

Shipbroker Fearnleys noted in its latest weekly LNG report that uncertainty in trading, coupled with many vessels marketed for sublet, has created a cautious mood with bearish undertones.

However, after softening from last week’s initial spike, rates appear to have stabilised, with prompt availabilities commanding around US$200,000 per day for two-stroke vessels and above US$100,000 per day for TFDE vessels in both basins. Last week, daily spot rates had approached US$300,000.

“There is a sense of charterers holding off for now, hoping for more clarity on laycans further out in the fixing window, especially with the emergence of more sublets and potential competition,” Fearnleys said.

Following the declaration of force majeure, QatarEnergy has decided to charter out some of its empty ships that cannot return to Qatar. Market sources told Riviera that two vessels have already been chartered out and more are being offered. These two carriers are currently off West Africa, well-positioned to load from the US.

Brokers also noted that Qatar may offer ships waiting east of Oman to the market.