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Europe set for LNG supply surge after premiums top Asia

(Repeats to additional clients)

By Oleg Vukmanovic

MILAN, Feb 19 (Reuters) - Europe is attracting twice as many liquefied natural gas (LNG) tankers as last year and more are expected in what is now the premium-priced market after a year-long demand slump in Asia.

In just a week, seven new LNG tankers embarked for Belgian, British and Dutch ports and six more may arrive in the next month, attracted by the widest and most consistent premium to Asian prices in at least five years, price data on Reuters Eikon shows.

The shift signals an end to Asia's huge LNG price premium to Europe's benchmark UK gas hub, raising hopes that supply will over coming years be more evenly spread between the basins, traders said.

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"We see NBP (UK natural gas prices) plus transportation returning as a price benchmark to Asia, at least for the next two to three years," said Javier Moret, head of LNG origination at RWE (LSE: 0HA0.L - news) , Germany's biggest power utility.

More than 1.3 million cubic metres (mcm) of LNG, or 800 mcm of pipeline gas, is inbound on officially announced tankers from Qatar, Norway and Trinidad.

That's double the same time last year and enough to cover three days of British winter demand.

At least six more tankers - the Zarga, Onaiza, Al Sadd, Ejnan and Al Ruwais - are expected to arrive in those ports during the next few weeks, according to analysts.

"Some trading companies are also trying to divert cargoes away from the east towards Europe," a trader at an oil major said.

Asia has reigned as the world's premium LNG market since Japan's 2011 Fukushima disaster which shuttered the country's nuclear plants, driving gas prices to near all-time highs.

But a 60-percent drop in Asian prices in the past year, driven by a streak of mild weather and new supplies, has again made Europe the most attractive market for flexible cargoes.

British and Dutch prices for March are trading at a $1.20 per million British thermal units (mmBtu) premium to Asia.

Plunging Far East prices are also trapping Atlantic Basin-produced LNG from Trinidad, Nigeria and Algeria within the region because it is no longer profitable to send it east.

Re-exports from countries such as Spain have also been brought to a halt for the first time in five years given weak demand around the globe.

One challenger to Europe for supply is India, where prices are also trading at premiums to Asia, albeit below those in Europe and the Americas. (Additional reporting by Nina Chestney in London and Henning Gloystein in Singapore; editing by Jason Neely)