Suez ship congestion could delay 10 LNG cargoes to Europe - Analysts

CAIRO: Dislodging a container ship blocking the Suez Canal, one the world’s busiest trade routes, may delay delivery to Europe of around 1 million tonnes of liquefied natural gas (LNG) on 10 vessels if the blockage lasts for two weeks, researcher Rystad Energy said.

The canal is the main route for LNG cargoes heading from the Middle East to Europe and for some cargoes heading from the Mediterranean to Asia. Salvage officials said the congestion could take weeks to resolve.

During 2020, close to 260 LNG cargoes were sent via the canal from Qatar, a major producer, to Europe, Rystad said.

"Even if the route is liberated within one week, there is a large queue of cargoes lining up to cross the canal," said Carlos Torres Diaz, Rystad's head of gas and power markets. "The return to normal flow will take some time."

There were three cargoes for early April delivery waiting on Wednesday to cross to the Mediterranean. At least two others were in the Arabian Sea and headed to the Suez Canal.

LNG tanker Golar Tundra loaded at Egypt’s Idku on March 21 and was en route to Asia, Wood Mackenzie analyst Lucas Schmitt said. At the Southern entrance, tanker Rasheeda was awaiting to transit with a shipment from Qatar.

During winter in the northern hemisphere, when heating demand grows, a congestion at the Panama canal sent spot LNG prices in Asia to record levels, as shippers were forced to seek longer and more expensive routes. The spring season and the pipeline network can help to contain a surge in prices this time.

Charter rates are low – around $30,000 per day – but could tighten if the disruption lasts, Schmitt said.

Shippers may have to reverse course and travel around the Cape of Good Hope, or wait in the Red Sea and Mediterranean for the stranded tanker Ever Given to be refloated, consultancy Kpler said in a report on Wednesday.

The voyage from Suez to northwest Europe takes around nine days at average speeds, Rystad said. The trip from Qatar to northwest Europe takes around 17 days, but rerouting around the Cape of Good Hope would take more than 30 days, the firm added.

"It could be a perfect opportunity for U.S. producers to secure some orders at a time of such a transport route crisis," Torres Diaz said.