Europe's Gas Uncertainty Help Drive Asian LNG Spot Prices Higher

Asian spot liquefied natural gas (LNG) prices rose this week to a one-month peak, as the expiry of a transit deal for Russian gas through Ukraine caused uncertainty in Europe's gas outlook.

The average LNG price for February delivery into Northeast Asia LNG-AS was $14.60 per million British thermal units (mmBtu), industry sources estimated.

Ukraine had allowed Russia to keep pumping gas across its territory despite nearly three years of war, but Kyiv refused to renew a five-year deal that expired on New Year's Day.

"While this risk was predictable, the European gas balance remains uncertain in the first quarter. A key concern is the relatively high withdrawals from European gas inventories, which are currently 16% lower year-over-year due to stronger gas demand," said Siamak Adibi, analyst at consultancy FGE.

While this loss of Russian gas will not directly impact Northwest Europe's gas balances, more demand from eastern markets like Slovakia could draw additional volumes from the Western supply pool, added Adibi.

"The suspension of the Russian gas flow via Ukraine could result in a net loss for the European market, necessitating higher LNG imports to balance the market in 2025."

Gains in Northwest European delivered prices have outpaced Asia's price