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They delivered it: the first Russian LNG is in the United States

The gas carrier with the first cargo of LNG from the Yamal LNG project has finally reached the United States. According to Marinetraffic, the Gaselys tanker approached the port of Boston today morning and is supposed to get unloaded at the Everett terminal. This cargo of 100mn c m of LNG is the first LNG ever supplied to the United States. In the mid-2000s, Gazprom was going to supply the U.S. with LNG from the Stokman field, but things changed after the shale revolution. Today the United States is the biggest gas extractor in the world and the 6th biggest LNG exporter.

In the morning of Jan 24 the tanker arrived to Boston. Source: marinetraffic.com

The beginning of this story was not very happy though: on Dec 18, Gaselys changed direction in the Atlantic Ocean and headed for the Spanish port of Algeciras. But a few days later, it made a U-turn to the United States. The owner of the carrier and the LNG, Engie told Bloomberg that the cargo was heading for the United States: the destination was the same, Everett, but the date of arrival was delayed for weather reasons.

The U-turns in the Atlantic Ocean

On Dec 27, 2017, the Christophe de Margerie tanker delivered the first bunch of LNG from Yamal to the Isle of Grain terminal at the British port of Harwich for Petronas of Malaysia. On Jan 2, it was reported that the LNG was reloaded onto Gaselys, which, according to Marinetraffic, sailed off on Jan 7 to Everett.

According to Kommersant newspaper, Petronas sold the LNG (100 million cubic meters) to Engie of France, who was going to resell it while the prices were high: in early Jan 2018, due to a storm, LNG prices on the U.S. east coast jumped to all time high $6,300 per 1,000 cubic meters. When the storm passed, the prices dropped but Gaselys was still en route. This is, perhaps, why, it was resent to Spain, one of the major LNG consumers in Europe. On Dec 29, 2017, the Boris Vilkitsky LNG carrier delivered a bunch of LNG to Rotterdam for CNPC of China, but the gas was not sent to China. On Jan 2, it was reloaded onto Clean Ocean and sent to the Spanish terminal of Mugardos.

A trader told Kommersant that in winter it is hard to find free LNG. Therefore, cargoes often change their directions. “So, nobody is surprised when a cargo of Norwegian LNG heading for Great Britain or Spain suddenly changes it direction and goes to Asia,” the source said.

In Dec 2017, gas prices in Spain were high but lower than in Asia ($10 per MBTU against $11 per MBTU). But it is much cheaper for a ship to carry LNG from Rotterdam to Spain than to China. This is, perhaps, why CNPC sold the gas to Spain. According to Gas Natural Fenosa, it is expecting the first bunch of LNG from Yamal (a total of 2.5 million tons a year) in Apr 2018.

Timera Energy believes that Yamal LNG is one of the most promising projects in the world. Even if Yamal LNG proves to be less competitive than LNG from Qatar, it will still be more competitive than LNG from the United States. The project is supposed to supply a total of 16.5 million tons of LNG a year (almost 23 billion cubic meters). The greater part of the gas is contracted by Novatek (who has a 50.1% stake in the project), Total of France (20%) and CNPC of China (20%). Gazprom and Gas Natural Fenosa are going to buy 2.5 million tons a year each.

Experts note that the founders of Yamal LNG have promised to supply their gas to Asia and even to the European states having no pipelines from Russia and that this may affect Gazprom’s exports.

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