Seaborne Russian gas supplies to Europe disrupted by looming port bans (updated)

Dynagas LNG Partners LP

02/03/2022 18:03

(Recasts with further detail, comment, context)
    By Nora Buli, Jonathan Saul and Marwa Rashad
    OSLO/LONDON, March 2 (Reuters) - Supplies of Russian
liquefied natural gas (LNG) to Europe have been disrupted by
uncertainty over whether ships can discharge cargoes at European
ports due to sanctions imposed on Moscow, according to ship
tracking data and trade sources on Wednesday.
    The disruptions come at a time when Europe is contending
with record prices for natural gas due to tight supplies that
have ramped up energy bills and led governments to pay billions
of dollars in subsidies to consumers struggling to stay warm.
    Four tankers that loaded LNG at the Russian gas terminal in
Yamal and initially said they were sailing to British and French
ports have changed their destination status to "For Orders",
Refinitiv Eikon ship tracking data showed. That means the
vessels are awaiting new orders from their owners. 
    The change in destinations came after Britain said on Monday
it was denying entry to British ports to ships that are Russian
owned, operated, controlled, chartered, registered or flagged as
it ratcheted up pressure on Moscow over the invasion of Ukraine.
 urn:newsml:reuters.com:*:nL8N2V377V
    The British move has added to the widespread disruption to
energy markets caused by punitive measures the West has taken
against Moscow, with traders steering clear of Russian fuel even
though many of the restrictions, including Britain's port ban,
exempts Russian oil and gas in itself.  urn:newsml:reuters.com:*:nL1N2V42EN  urn:newsml:reuters.com:*:nL8N2V55AD
    "The UK's decision to turn away Russian-flagged, operated or
chartered vessels may materially tighten the market if this move
is followed by other countries," said Rystad Energy's senior gas
and LNG analyst Kaushal Ramesh. 
    The diversion of the tanker closest to Britain, the Fedor
Litke, helped propel British gas prices higher on Wednesday,
Refinitiv analysts said.
    The British front-month gas price  TRGBNBPMc1  rose more
than 40% on Wednesday to 410 pence per therm but was still short
of a record high of 453 hit on Dec. 21. The British day-ahead
gas price  TRGBNBPD1  rose 37% to 405 pence per therm.
        
    EU CONSIDERS BAN
    Russia has supplied 7.5% of Britain's LNG imports so far
this year and accounted for 19% of its imports in 2021, Ramesh
said.
    European Union states are also considering a ban on Russian
ships entering the bloc's ports to tighten sea restrictions
after a halt in air traffic, European officials say, a step that
would further hamper Russia's commercial shipments.  urn:newsml:reuters.com:*:nL1N2V428Y
    The European Parliament on Tuesday approved a non-binding
resolution calling for broader sanctions on Russia as well as
for EU ports to be closed to Russian ships, and ships coming to
or from Russia, except for "justified humanitarian reasons".    
    Trade sources said the new destination status for the four
LNG vessels reflected caution over what will happen next with
European ports.
    The Dutch front-month gas contract  TRNLTTFMc1 , a European
benchmark, ended trading 42% higher at 174 euros per megawatt
hour (MWh) after setting a new record high of 185 euros/MWh.
    Canada said on Tuesday that it too would shut its ports to
Russian-owned ships later this week.
    The Fedor Litke LNG tanker changed course late on Tuesday
from its previous destination of Britain's Isle of Grain gas
import terminal.
    That followed the diversion of the NS Champion, an oil
tanker operated by Russian shipping company Sovcomflot, which
diverted away from Britain on Monday and sailed towards Denmark
instead.
    A spokesperson for National Grid  NG.L , which operates Isle
of Grain, said: "We are fully supportive of government action to
order UK ports to block all Russian-linked ships, and are in
urgent discussions with government and customers to ensure this
can be applied at LNG terminals."

    EXPORTS QUESTIONED 
    The other three vessels - the Boris Davydov, the Christophe
de Margerie and the Boris Vilkitsky - were headed to the Isle of
Grain and French gas terminals at Montoir and Dunkirk before
changing their destination status, the tracking data showed.
    The controlling shareholder in Yamal LNG, Novatek  NVTK.MM ,
did not respond to requests for comment on the changes. The
Christophe de Margerie is operated by Yamal LNG.
    Greece-based Dynagas  DLNG.N , which operates the Fedor
Litke, Boris Davydov and Boris Vilkitsky according to shipping
records, did not respond to a request for comment. 
    The Montoir terminal was still expecting the Christophe de
Margerie, said a spokesperson for the terminal operator Elegny,
which is owned by Engie  ENGIE.PA .
    Another LNG vessel operated by Russian shipping company
Sovcomflot, the La Perouse, was also expected at the terminal
although it had no arrival date, the spokesperson said.
    Sovcomflot has declined to comment this week. 
    "The market seems to realise that Russia is not just a major
pipeline exporter but also the world's fourth largest LNG
exporter," analysts at Engie EnergyScan said in a note.
    "With companies active in the LNG sector like Shell
 SHEL.L , BP  BP.L  and now Exxon Mobil  XOM.N  deciding to exit
the country and withdraw from their partnerships with Russian
companies, the sustainability of Russia LNG exports is
questioned," they wrote.

 (Additional reporting by Forrest Crellin in Paris and Kate
Abnett in Brussels; Editing by Simon Webb and David Clarke)
 ((Nora.Buli@thomsonreuters.com; (+47) 21 04 05 56; Reuters
Messaging: nora.buli.thomsonreuters.com@reuters.net))