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GLOBAL-LNG-Asian spot prices rally on summer demand, supply crunch

Asian spot prices for liquefied natural gas (LNG) rose this week as buyers sought to secure the fuel used for power generation amid a global supply crunch and high temperatures across the region.

The average LNG price for January delivery into Northeast Asia LNG-AS was estimated at about $15.60 per million British thermal units (mmBtu), up $1.15 from the previous week, industry sources said.

Except for a price peak in January, this is the highest level since 2014, as a warmer than usual summer drives up demand for electricity to power air-conditioners.

Temperatures in Beijing, Tokyo, Seoul and Shanghai are expected to be higher than average over the next two weeks, weather data from Refinitiv Eikon showed.

“Natural gas inventories in Europe are also still low, so Asia and Europe are competing for supply,” a trader in Houston said.

Pakistan LNG was among buyers that agreed to pay more than $15/mmBtu for September delivery in a bid to avoid power shortages, industry sources said. The company is also seeking seven cargoes for delivery in October and November. The tender closes on Aug. 24 and remains valid until Sept. 8, it said.

Angola’s LNG project has offered a cargo for delivery over August to September into Brazil, Europe, Mexico, India, Pakistan and Southeast Asia and will be loaded on the tanker Cubal.

While the spot market suffers from supply constraints, U.S. developer Tellurian Inc TELL.O offered some relief for long term-supply coming out of the United States. The company said it has secured sales to build its proposed 27.5-MTPA Driftwood export plants in Louisiana, ending a series of delays.

Tellurian said it will sell LNG to a unit of Royal Dutch Shell Plc RDSa.L – its third multi-billion dollar supply agreement in 10 weeks. It plans to start construction later this summer, with the first phase estimated at a $16.8 billion cost. .
Source: Reuters (Reporting by Sabrina Valle; editing by Richard Pullin)

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