MADRID—At least two LNG cargoes have been diverted to Spain as temperatures there dropped to their lowest in decades, increasing demand for heating, according to data and analysts.
Rare heavy snow has blanketed parts of Spain, home to Europe’s biggest fleet of terminals for the super-chilled fuel used in power generation.
The freeze has led to gas prices more than doubling since the start of the year, to near record highs, according to Rebecca Chia, an LNG analyst at data intelligence firm Kpler.
LNG tanker Bayelsa, originally headed for Fos Cavaou in France, changed course to Huelva in southern Spain, Kpler and Refinitiv Eikon data showed. Another France-bound cargo, Gaslog Santiago, went instead to Barcelona, Chia said.
Freezing temperatures have extended to some other European countries, as well as China and Japan.
Competition for cargoes between Spain and Asia has raised prices on European and Asian gas indexes but this is likely to abate as temperatures return to normal, according to traders. Temperatures are forecast to return to seasonal levels in Spain by Jan. 23, according to Refinitiv Eikon.
Cuts in gas supply from Algeria last week also pushed prices up but a resumption of flows through the Medgaz pipeline to Europe helped bring them down again, said a senior LNG trader in Spain.
This volatility has encouraged trading firms to move cargoes around to secure the best price.
“I have taken calls from loads of people I had never spoken to before because they want to place volume in Spain,” the Spain-based trader said.
But the necessary slots to store it are now scarce, he added: “Our system is fully booked.”
Spanish and Portuguese LNG prices logged by market operator MIBGAS reached an intra-day high of 54.10 euros per megawatt-hour on Jan. 8 but fell to 26.50 euros on Jan. 11.
News of higher prices spread consternation in Spain during the cold snap, prompting Energy and Environment Minister Teresa Ribera to seek to reassure consumers at the weekend that any increases in their bills would be limited to “a few euros.”
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Congestion delaying LNG shipments via the Panama Canal is expected to last through the peak demand winter months, traders close to the situation said on Jan. 14, although the canal’s regulator said it had made changes to speed up transit.
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