LNG Vessel’s U-Turn to U.K. From Hawaii Shows Draw of European Energy Crisis

(Bloomberg) -- Getting LNG to gas-starved Europe is so profitable that one tanker carrying the fuel made a U-turn in the Pacific Ocean, crossed the Panama Canal twice and spent nearly $1 million in tolls just to get there. 

After nearly two months at sea, the Hellas Diana tanker carrying U.S. liquefied natural gas declared the U.K. as its destination, underscoring the extent to which Europe’s energy crisis continues to draw cargoes away from more traditional seasonal markets in Asia. 

European natural gas prices are so high and shipping rates to the continent are so low that the costly, six-week voyage around the world would still be profitable even after paying an estimated $950,000 in tolls, said Hadrien Collineau, an LNG industry analyst with the London office of consultancy firm Energy Aspects. 

The Malta-flagged tanker left Cheniere Energy’s Corpus Christi LNG on the U.S. Gulf Coast on Nov. 28, crossed through the Panama Canal and was on a path to Asia when it abruptly turned around on Dec. 20. The tanker crossed through the canal a second time and then through Atlantic Ocean to European waters, where it’s expected to dock at Milford Haven on Wednesday. 

Though the difference in prices between Europe and Asia has narrowed significantly, the lower shipping costs to cross the Atlantic still make it a more attractive market for U.S. cargoes. 

“Under the latest forward curves, most flexible cargoes globally still have the incentive to go to Europe,” Collineau said. 

That may not last for long, with Citigroup analysts forecasting that gas prices on the continent have likely peaked this winter.

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