Rotterdam LNG share of bunker demand to rise

LNG as a share of the Rotterdam bunker market may surpass 3pc this summer as LNG prices dip below conventional marine fuels.

The share of LNG for bunkering in Rotterdam ranged from 0.3-2.6pc, or about 7,200t to 57,900t very low-sulphur fuel oil (VLSFO)-equivalent from the fourth quarter of 2021 to the first quarter of this year. Demand for Rotterdam LNG for bunkering has been soft because of stronger LNG prices relative to conventional marine fuels. But average LNG prices slipped below the price of VLSFO in May in northwest Europe, for the first time since June 2021, Argus data showed. The LNG–marine gasoil (MGO) differential flipped to a discount in January, for the first time since July 2021 (see chart).

LNG prices could remain muted. Europe's gas market has already nearly exhausted its flexibility to increase demand in response to tumbling prices. EU LNG facilities were already nearly 71pc full as of 8 June, based on data submitted to EU body GIE's transparency platform. This was up from 50pc a year earlier and a five-year average of 53.4pc. Storage injections will be able to soak up a far smaller share of summer supply this year than normal — let alone than in 2022.

If the LNG–conventional marine fuel price discount holds in the third quarter, demand for LNG for bunkering in Rotterdam may rise to 3.6-3.9pc of the bunker market — the share observed in the first and second quarter of 2021 (see chart).

Rotterdam LNG sales were at about 85,500t and 96,300t VLSFO-equivalent, respectively, during those quarters.

Some of the major LNG for bunkering suppliers in northwest Europe include Gasum, Shell, Titan and TotalEnergies.

By Stefka Wechsler

Rotterdam, bunker demand fuel share

NW Europe LNG less conventional bunkers $/t