Asian traders move to Europe in response to rising LNG demand

Asian energy traders are moving to London in response to rising demand for liquefied natural gas (LNG) in Europe following Russia’s invasion of Ukraine. London is an ideal base for European operations thanks to its established gas market.

Asian energy commodity trading companies are setting up or preparing plans to establish LNG-focused trading desks to take advantage of Europe’s new position as the world’s largest LNG importer.

They include Japanese companies Tokyo Gas, Osaka Gas and Kansai Electric, and South Korea’s SK E&S, while China’s ENN, Cnooc, PetroChina and Sinochem are also considering moving to the UK, people familiar with the situation told the Financial Times.

“To make profits, you need stronger connections and a presence in European markets. … Companies are much more aware that selling cargoes to Europe can generate high margins,” said Felix Booth, head of LNG at analytics firm Vortexa.

London is an obvious destination compared with other European cities because it is a leading gas trading hub, established after oil and gas were discovered in the North Sea in the 1960s. Trading profits in Europe were particularly high last summer, when gas prices surged as the region sought to secure fuel ahead of winter.