(Bloomberg) -- Some liquefied natural gas traders are opting to pay fees for supplies they initially intended to send to Germany in order to chase higher profits in Asia, according to the nation’s state-owned terminal operator.
“There are two, three cargoes that have not come recently, where you can see traders saying, ‘Oh, I’ll pay the fee for the terminal, but I’d rather go to Asia,’” said Peter Röttgen, managing director of Deutsche Energy Terminal GmbH. Demand for the ultra-chilled gas has jumped in the region ahead of winter.
While Germany has ample fuel stockpiles as it heads into the heating season, the development shows how easily it can be left without cargoes when demand in other regions soars. BloombergNEF estimates that US LNG exports for the coming months are currently more profitable to Asia than to Europe.
Germany has tried to avoid cargo diversions by including a delivery obligation in some of its contracts, with a fine corresponding to around 1% of an LNG cargo’s value. The operator also charges a regasification fee in take-or-pay contracts, even if supplies haven’t been delivered.
The country relies on a number of global suppliers — mostly from the US — to meet its fuel needs after Russia curbed pipeline flows during the energy crisis, and the development highlights the nation’s risky reliance on divertable supplies.
In a further sign of the limited appetite among traders to send cargoes to Germany, a June tender for LNG capacity at the state-chartered terminals didn’t sell anything, Röttgen said at a Handelsblatt conference in Berlin on Tuesday. He attributed those results to the very high price set by Deutsche Energy Terminal, which it did for “competitive reasons.”
--With assistance from Anna Shiryaevskaya.
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