Global gas inventory has swollen as demand for liquefied natural gas is slow to recover and fears of a second wave of the coronavirus outbreak are adding to caution as economies restart.
Dozens of LNG tankers are idling as gas storage tanks become full in countries such as Japan, South Korea and in Europe, trade and shipping sources said.
There are 27 laden LNG tankers flagged by data intelligence firm Kpler as floating, with eight of them signalling Japan as their destination, said Rebecca Chia, analyst at the company. Kpler considers a vessel as floating if it has been on the water for more than five days.
Gas demand in top LNG importer Japan has been weak as COVID-19, the disease caused by the novel coronavirus, forced hotels and restaurants to shut and as factories suspend operations. Gas sales in the commercial segment fell by up to 50% in May from a year earlier, while gas sales for the industrial segment slid by 20% to 30%.
Japan’s monthly LNG import volumes in May hit the lowest in a decade after the country’s state of emergency declared in early April remained in force until late May.
South Korea’s top LNG importer Korea Gas Corp (KOGAS) has deferred several cargoes to the later part of the year as it grapples with high inventory, sources told Reuters.
European gas inventories have also been at record levels after a warm winter.
“Storage capacity in Northwest Europe is expected to hit maximum capacity before the end of the injection season, which is estimated to be some time in August,” analysts from shipbroker Simpson Spence Young said.