GLOBAL LNG-Premium deals in China and Japan sends prices above $10
Asian liquefied natural gas (LNG) spot prices rose above $10 per million British thermal units (mmBtu) on Thursday, driven to a three-year high by Chinese and Japanese deals, weather-driven demand and tight supply.
Spot prices LNG-AS for January delivery hit $10.10 per mmBtu, 25 cents above last week’s levels, while the price for February delivery rose as high as $10.20 per mmBtu.
Tight shipping availability and rising freight rates constrained Asia’s ability to draw in supply from the Atlantic Basin, adding impetus to price gains as several production plants underwent maintenance.
Indonesia’s Bontang export facility pumped at reduced capacity after a technical fault with a liquefied petroleum gas (LPG) enrichment unit, leaving less supply available for Japanese off-takers, while Chevron’s Gorgon and Wheatstone projects in Australia were also experiencing output cuts.
Falling temperatures in Japan, South Korea and China added to support from continuing nuclear outages, keeping consumption strong and spurring demand to replenish stores with spot purchases.
PetroChina bought a free-no-board cargo loading Jan. 13-14 from Australia’s Gladstone LNG project for $9.50-$9.55 per mmBtu, or above $10 per mmBtu when shipping costs are added.
Kansai Electric paid an estimated $9.40 per mmBtu for a January cargo from the Australia Pacific LNG project, also topping $10 per mmBtu with shipping costs.
More deals done above $10 per mmBtu were reported by traders.
An Angola LNG cargo put up for sale on Thursday for Dec. 11-12 loading could find its way on to Asia markets.
A gas leak at Pakistan GasPort’s newly inaugurated LNG import terminal forced a shutdown, prompting cargo delays, diversions or cancellations, but the operator said it expected a restart by Friday evening.
Trade and industry sources put the repair time at 10 days initially, adding that the leak occurred on Dec. 5.
Pakistan LNG released trader bids for its tender for four cargoes in February, identifying B.B. Energy, Gunvor and Trafigura as the most competitive providers.
B.B. Energy is set to take the Feb. 6-7 slot with a 15.7312 percent oil-linked offer, Gunvor the Feb. 16-17 slot with 16.0857 percent and Trafigura the Feb. 21-22 and Feb. 26-27 slots with 15.8488 and 14.9887 percent respectively.
India’s GSPC closed a buy tender on Tuesday for a cargo due in the second half of December at a price in the low $9 per mmBtu region.
Peer Gail India purchased a late January and late February cargo. Bharat Petroleum was also due to purchase a Jan. 19-21 cargo on Friday.
In the Atlantic, the focus was on Spain, where gas prices at the PVB trading hub topped $10 per mmBtu, a signal for spot LNG sellers.
However, interest at those prices was considered marginal and not reflective of the market as a whole, one trader said.
“We can’t buy at these prices because we can’t sell at these prices,” he said.
“Operators entered this market with LNG length, but now the lack of rain and wind is eroding those stocks and we are starting to see some shorts in the market.”
A short-lived surge in Italian spot gas prices had mostly petered out by Thursday.
Traders also expected Argentina to come to the market soon with demand for summer deliveries.
Tenders by Mexican companies Pemex and CFE for four to five years of supply are also expected in the next week.
Source: Reuters (Editing by David Goodman)