Italian PSV contracts for delivery in the second half of 2026 rallied on 19 March following news that Italian term LNG deliveries from Qatar are likely to be disrupted for years.
Qatar's 77mn t/yr Ras Laffan terminal was hit by Iranian missiles, damaging trains four and six. Train four supplies Italian firm Edison's 4.6mn t/yr agreement for the Adriatic LNG terminal. QatarEnergy said supply to Italy could be disrupted for years.
The PSV-TTF second-quarter basis market was unchanged on Thursday, probably as near-term Qatari disruption was already priced in. But the third and fourth-quarter basis markets jumped by 45¢/MWh and 40¢/MWh, respectively — the highest daily rises for both since the Middle East war started. This is likely to be because of the anticipated extended disruption at Ras Laffan train four.
Adriatic LNG is fully booked for the rest of the year, so fixed regasification costs are sunk and import incentives are calculated on a cheaper marginal cost basis. Judging by forward PSV prices, and assuming a 30¢/mn Btu des TTF discount for fourth-quarter deliveries to Adriatic, the terminal is still 89¢/mn Btu profitable on a marginal cost basis for the second half of the year.
This means the PSV does not need to bid up higher relative to the TTF to attract more LNG in light of the loss of Qatari cargoes for the rest of the year.
But the PSV-TTF basis for the third and fourth quarters has jumped, probably because Qatari Q-flex carriers that deliver to Adriatic LNG are larger than carriers in the Atlantic basin, and Adriatic LNG has not changed its regasification schedule, meaning less LNG is likely to be delivered per slot.
Were all Qatari cargoes that delivered in the second half of last year to be replaced by two-stroke cargoes, assuming each carrier is 90pc full, this would have led to combined lower deliveries of 400,000t over the period. This would be equal to 514mn m³ of gas or 4.2mn m³/d of lost supply in the second half of the year. Average Italian gas consumption was 158.8mn m³/d in July-December last year. This suggests the supply loss could be limited if Edison replaces all the Qatari cargoes.
And there is limited scope for the larger carriers to load from other terminals in the Atlantic basin. QatarEnergy attempted to sublet its Q-Flex carriers in the Atlantic basin, which have a capacity around 40,000m³ larger than modern two-stroke carriers. But the fact these tankers can only be loaded at a limited number of ports — and an exceptionally high daily boil-off rate of 0.145pc, compared with 0.08pc for two-stroke carriers — meant there was no uptake, with all Q-Flex carriers in the Atlantic basin now returning to the Pacific.
Adriatic LNG did not immediately respond to a request for comment on whether its regasification schedule will change. Neither did Edison immediately respond to a request for comment on whether it plans to buy spot cargoes to replace Qatari volumes.
