US Gulf coast LNG at record premium to VLSFO

Spanish Market: Natural gas, Oil products
30/09/21

US Gulf coast LNG climbed to a record against prices for Houston very low-sulfur fuel oil (VLSFO) this month, eroding LNG demand for powering ships.

US Gulf coast LNG in September rose to 185pc of the price of Houston VLSFO, up from 66pc a year earlier and the highest since VLSFO first began actively trading in January 2020, according to Argus data.

US LNG prices have climbed as surging demand, lingering hot weather and modest natural gas production growth stoke concerns about winter supplies.

US Gulf coast LNG first moved to a premium to Houston VLSFO in July. LNG prices as a share of Houston VLSFO averaged 72pc in the first half of 2021 and 55pc in full-year 2020, driving up interest in LNG for bunkering.

But the recent LNG price surge could leave potential investors in LNG for bunkering on the sidelines, at least temporarily. Ship owners with vessels outfitted with dual-fuel engines capable of burning LNG and oil, and who buy LNG on a spot basis, have switched to burning oil. For LNG bunker buyers with oil-linked term LNG contracts, the price spike might not be a deterrent.

US LNG injections are expected to pick up in October, putting downward pressure on gas prices, but it is unclear whether LNG will revert to a discount to VLSFO for the remainder of the year.

LNG bunker demand in Rotterdam, the biggest bunkering port in Europe, reached 296,516m3 in the first half of 2021, surpassing the 210,334m3 of demand for all of 2020, port of Rotterdam data showed. Even with that rapid growth, LNG in Rotterdam accounted for 3.6pc of the port's total bunker demand in the first half of the year, compared with 77pc for VLSFO, 18pc for marine gasoil (MGO) and less than 2pc for biofuels. Northwest Europe LNG price as a share of the price for Amsterdam-Rotterdam-Antwerp VLSFO was pegged at 165pc in September, compared with 66pc during the same period last year, Argus data showed.

Burning LNG reduces CO2 emissions by about 25pc compared with burning fuel oil. The International Maritime Organization requires vessels to reduce their CO2 emissions by 40pc by 2030 and by 70pc by 2050 from 2008 base levels.

By Stefka Wechsler

LNG % of VLSFO price

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17/12/25

Australia coal, Fe prices to fall; LNG up: Treasury

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US House clears hurdle to pass permitting bill

16/12/25

US House clears hurdle to pass permitting bill

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EU-Kommission möchte Verbrenner-Aus abschwächen

16/12/25

EU-Kommission möchte Verbrenner-Aus abschwächen

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EU eases ICE phase-out with 2035 CO2 car target: Update

16/12/25

EU eases ICE phase-out with 2035 CO2 car target: Update

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EU eases ICE phase-out with new 2035 CO2 car target

16/12/25

EU eases ICE phase-out with new 2035 CO2 car target

Brussels, 16 December (Argus) — The European Commission has proposed a new 90pc cut in car fleet emissions by 2035, replacing the previously agreed 100pc target that would have effectively phased out internal combustion engine (ICE) vehicles. The plan would allow some ICE vehicles to remain in use beyond 2035, alongside plug-in hybrids, range extenders and mild hybrids, as well as electric and hydrogen cars. The remaining 10pc of emissions would need to be offset through low-carbon steel, e-fuels or biofuels, according to the commission. The proposals need to be adopted by a majority in the European Parliament and among EU states. Automakers could also "bank and borrow" credits between 2030-32 to help meet the existing 2030 target of a 55pc cut from 2021 levels. Under the new proposals, manufacturers using these flexibilities would only need to achieve a 40pc fleet-average reduction, down from a previously planned 50pc. Expanded carbon-neutral criteria would allow sustainable biofuels to help meet the targets that currently require 0g/km from 2035. EU renewable ethanol group ePure said emissions from ethanol were 79pc lower than fossil fuels in 2024, in line with previous years. The European Biodiesel Board reported savings of 77-81pc for biodiesel, using the official fossil fuel comparator of 94g of CO2e/MJ. German MEP Peter Liese criticised the original ICE ban, but said industry problems stem from market shifts, not from Brussels. "The industry must stop shifting the blame for its own mistakes and for market developments, for example in China, onto Brussels," he said, adding that he will push for green steel recognition before 2035. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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