By Ekaterina Kravtsova
LONDON (Reuters) - Full storage tanks of liquified natural gas (LNG) in India have prompted Gail India to sell a U.S. cargo bound for the Asian nation to northwest Europe, industry sources said on Wednesday.
The sale of a cargo already on the water is the latest example of an oversupplied LNG market that has resulted in Asian spot LNG prices falling to an almost three-year low of around $4.30 per million British thermal units (mmBtu) this week.
It also signals that India's LNG demand, considered substantial compared to northeast Asia, is weaker than expected.
Europe has become a top destination this year for cargoes that cannot find a home in Asia because of high stock levels and low delivery prices.
The cargo on board of the Meridian Spirit that loaded at the U.S. Cove Point plant on March 20 was offered in a tender on March 25 when it was crossing the Atlantic Ocean.
It was sold at about $4.30 per mmBtu, three industry sources said. The cargo will be delivered to Belgium's Zeebrugge terminal, one of them added.
The vessel turned to northwest Europe on March 26 when the tender was closed, Refinitiv Eikon data showed.
There is a tank top situation at India's west coast terminals, meaning the storage facilities were full, the industry source said, adding this had led to the cargo being sold to a European destination.
Prices in India are at a slight discount to those in northeast Asia. But sources said that, even if the prices were going down further, it did not mean that India would be able to buy significantly more LNG.
Gail has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG, split between Dominion Energy's Cove Point plant and Cheniere Energy's Sabine Pass site.
The Meridian Spirit is expected to be used by Gail to load a new cargo in the U.S. Gulf in mid-May.
There are at least two tenders from other India's companies, trade sources said. Indian Oil Corp (IOC) is looking to buy a mid-May delivery cargo. Petronet is looking for three cargoes for delivery between July and December.
Regasification capacity has constrained LNG imports in India in recent years.
India has four terminals receiving LNG on the West coast. India's first East coast terminal Ennore was commissioned by IOC this month. Two more terminals, GSPC's Mundra and H Energ's Jaigarh, are expected to start up this year.
(Reporting by Ekaterina Kravtsova; Editing by Edmund Blair)