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  • June 15th, 2012

Global LNG-Asian LNG dips toward $17 on supply increase

Asian liquefied natural gas (LNG) spot prices LNG-AS began to ease toward $17 per million British thermal units (mmBtu) for July cargoes as new supplies came onto the market.

Australia’s Pluto LNG, which began production in late April, as well as Yemen LNG, which has been shut intermittently since March due to pipeline attacks, are both providing additional supplies into the market.

“It’s been softening a little bit because all of a sudden you have more spot availability,” one market source said.

Trinidad LNG also announced a tender this week for one cargo of LNG to be loaded from its plant in mid-August, and ConocoPhillips resumed shipments from its Alaska plant, an aged facility that was previously targeted for closure.

ConocoPhillips expects to deliver four or five cargoes of Alaska LNG this year, all of them to Japan.

Last month, Asian LNG spot prices had risen to four-year highs over $18 per mmBtu as Japan began stockpiling supplies for the summer, the peak period for electricity demand.

Despite prices easing, demand for LNG from Asia, especially with the two top importers, Japan and South Korea remains high, with Japan’s 10 utilities setting using 4.41 million tonnes of LNG in May, a record for the month.

Japan, the world’s largest importer of LNG, has been using record amounts of the fuel since the Fukushima crisis shook public confidence in nuclear power. All of the country’s nuclear power capacity is currently offline because of safety worries.

Tokyo Electric Power Co said earlier this week that it has signed a contract with Qatar Liquefied Gas Company to purchase 1 million tonnes of LNG annually from August. Qatar has played a major role in helping Japan meet its LNG needs since the Fukushima crisis, with hopes that the stop gap supply contracts would extend into longer term deals, according to industry experts.

State-run Korea Gas Corp (KOGAS), the world’s top corporate buyer of LNG, said its domestic gas sales rose 13.3 percent year-on-year in May.

In China, top Chinese gas producer China National Petroleum Corp (CNPC) said it plans to step up sales of LNG to domestic users to 9 million tonnes by the end of 2015 and encourage use of LNG-powered vehicles as part of a government push for cleaner energy.

British prompt gas prices fell to around $8.40 per mmBtu on Friday due to low demand and increased supply from Norway.

Goldman Sachs bucked the trend of bearish natural gas price outlooks this week by issuing a recommendation to buy UK gas for delivery next quarter, saying it expected prices to rise by 20 percent from current levels.

In the U.S., natural gas prices were around $2.50 per mmBtu on Friday.


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