RUSSIAN LNG TO EUROPE

REUTERS - Yamal, one of the world's largest liquefied natural gas (LNG) terminals in Arctic Russia, is expected to export as much as 11.7 million tonnes of LNG in the next seven months through Norway, according to the port hosting its ship-to-ship operations and Reuters calculations.

The ramp-up in output puts the Novatek terminal, in operation for less than a year, in excess of its nameplate capacity, with the Norwegian transfers the only way it can deliver the additional LNG to the market.

Yamal uses Arctic-classed LNG tankers to carry the gas through the Barents Sea; these vessels then transfer the cargo to more conventional tankers in Europe, enabling them to return sooner to the facility and pick up more supplies.

These transfers began in Honningsvag, Norway, last week, cutting the journey time to the previous transfer points in France, Belgium and the Netherlands by at least 2,000 kilometers and freeing up the Arctic tankers sooner.

Now, the local mayor of the tiny port on the tip of Norway, says up to 160 transfers are expected until the end of June.

"Between 150 and 160 transfers will take place in the port's fjord from November to June," local mayor Kristina Sigursdottir Hansen told Reuters. "Ships will be coming with gas from Russia, from Yamal ... More than 300 ships actually (will be involved)."

The Arc7-classed Yamal tankers in operation carry about 160,000 cubic meters or 73,000 tonnes of LNG per load, according to Refinitiv Eikon shipping data, making the volume expected to be involved in the transfers at 11.7 million tonnes until June.

That puts Yamal's output in the first six months of 2019 at 10 million tonnes, on track to exceed the facilities' nameplate capacity of 16.5 million tonnes a year. Novatek said last week its third train, or plant, has begun operations.

It did not respond to a request for comment on Tuesday.

ARBITRAGE CLOSED

The transfer operations in Norway come just as lower Asian LNG prices together with high shipping costs have closed an arbitrage with Asia and increased deliveries into Europe.

A Novatek company source said earlier this month it expected these dynamics to continue until mid-2019.

It has been in the market this month arranging cargo swaps between the Pacific and Atlantic basins to reduce its shipping costs to Asia, buying at least one cargo in the Pacific for December delivery. It was looking to arrange around three swap deals for this winter, according to the source.

Norway's Tschudi Shipping facilitates the ship-to-ship transfers, its chief executive Jon Edvard Sundnes said, confirming that there was a contract until June. He would not comment on the number of transfers.

Jan Morten Hansen, regional director for the Norwegian Coastal Administration, said "that is what Tschudi told us", when asked whether up to 160 transfers would take place. Four locations around Honningsvag can host the transfers and three operations are allowed to run simultaneously, he said.

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