Global LNG-Prices Jump On Buy Tenders, Supply Issues

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Asian spot prices for liquefied natural gas (LNG) jumped this week, buoyed by rising oil prices, a slew of buy tenders and supply issues concerning projects in Australia and Nigeria.

LNG for June delivery in Asia traded at about $4.40 per million British thermal units (mmBtu), up 40 cents from the previous week.

Buying interest emerged from importers including South Korea, Egypt and Argentina, which combined with recent tenders from Japanese end users, supported higher prices.

“Whether it constitutes a net pick up in demand or it just happens that all demand has come to market at the same time is not clear,” a trader said.

South Korea’s Komipo bought a cargo at around the $4.50 level for June delivery, traders said, although it was not clear who the seller was.

Japan’s Kansai was also expected to have picked up one or two cargoes for June/July delivery.

European gas prices rallied this week, tracking oil prices which rose to trade near $45 a barrel by Friday and are heading for a third straight week of gains as market sentiment turned more upbeat despite persistent oversupply.

Brent has surged about 6 percent so far this week.

“Oil has indeed rallied and I’m sure NBP was playing catch up,” said a trader, referring to European gas trading hub, Britain’s National Balancing Point (NBP).

“It’s going to push JKM (Japan Korea Marker) up so yes, certainly that impact of European gas prices is definitely there.”

On the supply side, there are some delays from Nigeria’s Bonny LNG project after the Bayelsa state government said the Gbaran Ubie facility, which supplies gas for the export terminal, had been sealed up for operating without a permit and staff had been evicted.

Australia’s Gorgon LNG export terminal is expected to resume production in May or June after the facility halted output at the start of the month due to mechanical problems.

Traders remained unsure of Angola LNG’s startup.

The plant is expected to resume exports next month after a rupture on the flare line forced a shutdown in April 2014.

Traders were anticipating tender results from buyers including Argentina’s YPF, India’s GSPC, Egypt’s EGAS and South Korea’s KOGAS in the coming weeks.

“The raft of tenders, the fact that Gorgon is not in the mix, and the uncertainty about Angola is pushing up prices,” said a trader.

Traders noted there was limited bearish news with the exception of Russia’s Sakhalin-2 LNG plant tendering to sell five cargoes in July.

Source: Hellenic Shipping News