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SEP 26 2016

GLOBAL LNG-Prices rise on Indian and South Korean demand

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 26th SEP 2016

Asian liquefied natural gas (LNG) gas prices rose this week on renewed Indian demand and prospects of South Korea ramping up term supplies from Qatar to replace lost nuclear output.

Prices for November delivery traded at $5.75 per million British thermal units (mmBtu), up around 15 cents from last week - helped by a surge in gas prices at Britain's benchmark gas market which increasingly sways Asian LNG markets.

This week, front-month gas prices at the UK hub rallied 12 percent to 27 pence per therm, or $4.80 per mmBtu, amid unprecedented levels of trading volatility caused by the shutdown of a major underground gas storage site in June.

Gail India seeks five cargoes for October-December delivery while other Indian importers are also said to be negotiating deliveries. A trader, however, said price-sensitive Indian importers are nearing their cutoff points, potentially resulting in tenders going unawarded - and dampening prices in the process.

"People are saying India is struggling to accept higher demand at current import prices," he said, adding that supply remains healthy overall. Dealers continue to watch for higher LNG imports from South Korea, which took offline four reactors with a combined capacity of 2,770 megawatts following an earthquake this month.

Owing to government restrictions, the biggest importer Korea Gas Corp may find it hard to contract replacement gas via spot markets, leading traders to believe it will instead ramp up imports from long-term suppliers such as Qatar, which has begun scaling back deliveries to Europe.

Korea Gas Corp already was talking to suppliers about upping deliveries for winter after strong air conditioning demand in summer depleted domestic stockpiles, traders have said, with the latest nuclear outages only adding to demand.

Cheniere Energy's Sabine Pass export facility in the United States has shut for four weeks of planned maintenance, though Royal Dutch Shell's Maran Gas Sparta vessel is nearing the plant and could load a cargo held in Sabine's storage tanks.

Angola LNG has returned from a multi-month outage with the offer of a cargo to be loaded onto the Sonangol Sambizanga tanker on Sept. 25-27. Egypt chose Glencore, Trafigura and B.B. Energy to supply a total of three cargoes following a tender.

A spokesman for B.B. Energy confirmed that it was awarded the December shipment. The firm recently hired trader Navin Ganesh, who is based in Houston, Texas, from Trafigura.

 

Tags

TOTAL Gas Natural Gas Gail India Energy Shell United States Import Liquefied natural gas Royal Dutch Shell Europe Trading India Asian Hotels North

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