Maritime market update: A coalition of 19 countries at COP26 to create zero emissions shipping

Risavika LNG index was at 89.95 EUR/MWh and up 15 % from two weeks back. The European gas prices remain volatile as expected, the recent bullish sentiment came from Gazprom not booking any additional gas transit capacity via Ukraine or via the Polish section of the Yamal-Europe pipeline for December. However, the company has been booking short-term transit capacities and started refilling its European storage facilities last week.

Oil product futures are dropping for the third week as oil demand recovery has slowed down. OPEC decreased its 2021 forecast call on its own members' crude by more than 100,000 BBL/D to 27.65mn BBL/D. Fuel oil 3.5 (FO 3.5) price was down 4.4 % to 423.91 USD/t, low sulphur oil (MFO 0.5) dropped 2.6 % to 555.61 USD/t and marine gasoil (MGO 0.1) lower by 4.4 % to 667.77 USD/t in two weeks.

In a longer-term perspective, discussions on decarbonization of maritime shipping took place during COP26 resulting in agreement between 19 countries including Britain and the United States to create zero emissions shipping trade routes between ports to speed up the decarbonisation of the global maritime industry. The countries agreed to support the establishment of at least six green corridors by 2025, which will require developing supplies of zero emissions fuels, the infrastructure required for decarbonisation and regulatory frameworks. However, it was unclear how green corridor commitments would get to zero shipping emissions and immediate need for regulatory changes had been highlighted.

Front Month Price index
LNG Risavika*	LBG blend Risavika**	FO 3.5 FOB Rdam	MFO 0.5 FOB Rdam	MGO 0.1 FOB ARA	ULSD FOB ARA	Unit
89.95	92.95	30.39	38.15	45.85	49.93	EUR/MWh
1523.72	1574.54	423.91	555.61	667.77	696.45	USD/t

LNG Risavika - LNG FOB Risavika

LBG Risavika 10 % - 10 % blend of Liquified Biogas

FO 3.5 FOB Rdam – European 3.5% Fuel Oil Barges FOB Rdam (Platts) Futures Quotes

MFO 0.5 FOB Rdam - European FOB Rdam Marine Fuel 0.5% Barges (Platts) Futures Quotes

MGO 0.1 FOB ARA - Gasoil 0.1% Barges FOB ARA (Platts) Futures Quotes

ULSD FOB ARA - European Diesel 10 ppm Barges FOB ARA (Platts) Futures Quotes

Source: CME Group, Gasum, Argus Media, Reuters

*An estimate for LNG FOB Risavika

** An estimate for 10 % LBG blend FOB Risavika