Suez ship congestion could delay 10 LNG deliveries to Europe, analysts say

(Reuters) - Dislodging a container ship blocking the Suez Canal, one the world’s busiest trade routes, may delay delivery to Europe of around 1 million tonnes of liquefied natural gas (LNG) on 10 vessels if the blockage lasts for two weeks, researcher Rystad Energy said.

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Salvage officials said it could take weeks to resolve the congestion on the canal, the main route for European imports of LNG from the Middle East and for some cargoes heading to Asia from the Mediterranean.

Qatar, a major producer, shipped close to 260 LNG cargoes to Europe in 2020 via the canal, Rystad said.

“Even if the route is liberated within one week, there is a large queue of cargoes lining up to cross the canal,” said Carlos Torres Diaz, Rystad’s head of gas and power markets. “The return to normal flow will take some time.”

There were three cargoes for early April delivery waiting on Wednesday to cross to the Mediterranean. At least two others were in the Arabian Sea and headed to the Suez Canal.

LNG tanker Golar Tundra loaded at Egypt’s Idku on March 21 and was en route to Asia, Wood Mackenzie analyst Lucas Schmitt said.

At the Southern entrance, the tanker Rasheeda was waiting with a shipment from Qatar.

Deliveries of LNG to Spain’s seven regasification terminals have not yet been disrupted, a spokesman for system operator Enagas said.

“No LNG ship bound for Spain has been affected by the ship stuck in the Suez Canal, and there are no ships scheduled to come from countries that use this route in the next two weeks.”

During winter in the northern hemisphere, when heating demand grows, congestion at the Panama Canal helped send spot LNG prices in Asia to record levels as shippers were forced to seek longer, more expensive routes.

The spring season and the pipeline network can help to contain a surge in prices this time.

Charter rates are low – around $30,000 per day – but could rise if the disruption lasts, Schmitt said.

Shippers may have to reverse course and travel around the Cape of Good Hope, or wait in the Red Sea and Mediterranean for the stranded tanker Ever Given to be refloated, consultancy Kpler said on Wednesday.

The voyage from Suez to northwest Europe takes around nine days at average speeds, Rystad said. The trip from Qatar to northwest Europe takes around 17 days, but rerouting around the Cape of Good Hope would take more than 30 days, the firm said.

“It could be a perfect opportunity for U.S. producers to secure some orders at a time of such a transport route crisis,” Torres Diaz said.

Reporting by Sabrina Valle; Additional reporting by Isla Binnie; editing by Aurora Ellis and Jason Neely