Australia sends LNG cargoes to Chile for first time in over three years

Two Australian liquefied natural gas cargoes are sailing to Chile in what would be the South American country's first shipments from that origin in over three years, according to ship-tracking data.

More cargoes going towards the Atlantic versus the Pacific would increase competition between the two basins and could tighten supply and support spot LNG prices in the region.

According to data from analytics firm Kpler, the Gaslog Gladstone tanker loaded a cargo at the Queensland Curtis LNG (QCLNG) terminal on January 27 and is expected to arrive at Quintero, Chile, on February 14. Another tanker, Barcelona Knutsen, also picked up a cargo at QCLNG on February 5 and is set to arrive at Mejillones, Chile, on February 27.

Australian LNG cargoes do not typically head to South America due to the distance and freight economics, making the US Gulf Coast or Atlantic basin supply more competitive for Chile and neighbouring markets, said Go Katayama, principal insight analyst at Kpler.

"The movements...appear to reflect tightness in the Atlantic Basin and relative price dynamics, which can temporarily open arbitrage opportunities for Pacific-sourced cargoes," he said.

"Portfolio optimisation by suppliers can also play a role, particularly when certain players are relatively short in the Atlantic Basin or when buyers are unwilling to pay prevailing premiums for US cargoes." Chile is a minor LNG importer, shipping in 1.9 million tonnes of the fuel last year, according to Kpler data.

It last received Australian LNG cargoes in mid-2022. Chile typically sources over half its LNG from Trinidad and Tobago.

But some of those cargoes were shipped to the US last month to take advantage of record prices during a severe winter freeze. BP and Shell, which together own 90 per cent of Trinidad's Atlantic LNG plant, brought gas from there to US plants during the freeze, LSEG data showed.

"Shell has delivery commitments in Chile, which it typically meets from Atlantic basin supply - mostly from Trinidad," said Ashley Sherman, senior analyst at Vortexa. "But it has recently delivered several Trinidad loadings to the US and Canada in response to their surging winter demand and prices."

"So Shell is backfilling its supply obligations to Chile with volumes from east Australia." Last month, at least three LNG cargoes from Australia and Canada went towards Europe and the Americas instead of their usual destination, Asia, after an Arctic storm curbed US exports.

(Reporting by Emily Chow; Editing by Thomas Derpinghaus)