Qatari LNG exports plunge 65%... European gas inventories fall well below average
East Asia accounts for 55% of global imports... South Korea's North American LNG imports double
As Middle Eastern supply disruptions intensify Europe's competition to secure liquefied natural gas (LNG), prospects have emerged that a warmer-than-usual winter in East Asia could alleviate upward price pressures. South Korea, China, Japan, and Taiwan account for approximately 55% of global LNG imports. Reduced heating demand in these nations could free up spot market volumes for Europe to secure.
Prolonged Middle East Supply Disruptions... Europe Faces Inventory Shortage
According to energy market intelligence firm Kpler, Qatar's LNG exports plummeted by approximately 40 million metric tons (65%) year-on-year in the January–September period as conflicts involving the U.S., Israel, and Iran disrupted major production facilities and export routes. Although the U.S. boosted its exports by 22%, it fell short of filling the supply deficit from the Middle East. The International Energy Agency (IEA) projected that global LNG supply will decrease by roughly 3% this year compared to last year.
Europe entered the winter season with inadequate gas stockpiles. As of Nov. 5, the European Union's gas storage level stood at around 75%, significantly below the 91% average for the same period since 2020. From the beginning of the year through Nov. 5, European natural gas prices averaged $18.06 per MMBtu, up 51% from last year's annual average.
European and Asian gas prices are also moving in closer sync than in the past. In an August report, the Korea Energy Economics Institute analyzed that price coupling between the European and East Asian LNG markets has strengthened following the Russia-Ukraine war.
East Asian Winter Temperatures Expected to Rise 3°C... Cold Snap Pushed Imports to 68% of World Total
Financial data provider LSEG forecasts that average temperatures across South Korea, Japan, Taiwan, and northern China from December through March next year will be approximately 3°C higher than seasonal averages, reflecting the impact of El Niño.
According to Kpler data, South Korea, Japan, China, and Taiwan have accounted for about 55% of global LNG imports since 2016. During a severe cold spell in the first quarter of 2018, this share surged to 68%. If temperatures this winter turn out higher than expected, additional spot market purchases by East Asian buyers could decline.
Despite the mild winter forecasts, LNG procurement continues. According to S&P Global, a South Korean LNG importer secured at least 5 to 6 cargoes scheduled for delivery between December and January, driven by the need to hedge against temporary cold spells and supply disruptions despite higher average seasonal temperatures.
"While a warmer-than-average winter is expected, these countries must still secure LNG to prepare for typical winter cold," Eric Yep, senior analyst at S&P Global Energy CERA, noted in a market commentary on Oct. 22.
Shift in South Korea's LNG sourcing channels is also evident. Citing Korea International Trade Association (KITA) statistics, reports showed that South Korea's North American LNG imports reached 7.82 million tons in the January–September period, a 102.9% surge year-on-year. Imports from the Middle East plunged 66.2% to 2.42 million tons, making North American imports more than triple those from the Middle East.
In Japan, nuclear power plant restarts are curbing LNG demand. Kpler estimates Japan's LNG imports at 63 million tons and China's at 62 million tons this year. Meanwhile, South Korea has more than doubled its imports of North American LNG amid a steep decline in Middle Eastern shipments.
