Various dynamics in the global LNG business mean that an influx of LNG into Northwest Europe is not expected this summer, according to a new Thomson Reuters LNG Outlook report.

Far more LNG cargoes were delivered to northwest Europe this winter (October – March 2014/15) than winter 2013/14.

Lower demand from several large Asian importers and higher export volume led to an ample supply overhang in the market, drawing excess Qatari and Atlantic cargoes to Europe.

This summer (April – September 2015), however, Thomson Reuters expects the LNG Asian spot price to remain depressed at 7–9 $/MMBtu. Its report therefore assumes the current differential (< 2 $/MMBtu) between northwest European forward prices and Asian LNG spot price will prevail throughout the summer – attracting uncommitted Atlantic volumes and excess Qatari production to Europe.

Having a few firm LNG off-take agreements, northwest Europe receives flexible volumes and serves as a balancing mechanism for the global LNG supply and demand. Thomson Reuters’ forecasts entail numerous variables and uncertainties; one such uncertainty that may influence the Atlantic LNG market this summer is Egypt’s ability to realise its ambitions as an LNG importer.

Based on potential new demand from Egypt and some growth in Asian LNG imports, the report anticipates only a modest increase of 1.5 bcm in total LNG flows to northwest Europe (UK, Belgium, and the Netherlands) this summer compared with last summer.

Mai Phan, LNG Analyst at Thomson Reuters, explained, “The ongoing tight price difference between the northeast Asian spot LNG and NBP forward means portfolio players would find it unattractive to send Atlantic LNG supplies to the Pacific. This leaves some Atlantic volumes available within the Atlantic-Basin. Nevertheless, we do not expect an influx of LNG to northwest Europe due to potential demand from new LNG importers such as Egypt.”