LNG Prices Firm On Chinese, South Korean Demand

LNG Prices Firm On Chinese, South Korean Demand

by Reuters

SINGAPORE/LONDON, May 25 (Reuters) - Asian spot liquefied natural gas (LNG) prices breached the $9 per million British thermal unit (mmBtu) mark this week, a three-year summer season high driven by crude oil gains, production outages and demand from key Asian consumers.

Spot prices for July <LNG-AS> delivery in Asia were at $9.20 per mmBtu this week, gaining 50 cents from the previous week and the highest in more than three months.

Demand from buyers in South Korea, China and India supported prices at a time when maintenance in Angola is expected to curb supply.

Higher prices for fuel oil - which can also be used for power generation - are also lending support to LNG prices.

Japan will see warmer weather over June-August, the official forecaster said on Friday, which could stoke LNG demand.

In Europe, the gas price spread is widening enough to fuel a resurgence in cargo diversions from Atlantic to Pacific markets, the prospect of which has helped keep European gas hubs, facing depleted inventories, buoyant, traders said.
Tenders And Sales

South Korea's Korea Midland Power Co Ltd (KOMIPO) likely bought a cargo for July 21 to 25 delivery at $9.30 per mmBtu, traders said.

The state-owned utility has re-issued a separate tender seeking two cargoes for delivery in November and January, a tender document showed.

China's offshore oil and gas company CNOOC and PetroChina are also bidding for several cargoes to be delivered during the summer months, traders said.

PetroChina, the country's top gas producer, has curbed supplies of the fuel to some industrial users in northern and western regions, which has driven up demand for LNG in China.

To prevent another round of winter shortages, state-run PetroChina started from early May limiting gas supplies and hiking prices for major customers, including city gas distributors and inland gas liquefaction plants in some western provinces, sources have said.

On the supply side, Abu Dhabi National Oil Co (ADNOC) likely awarded a sell tender that it issued earlier this week at $9.50 to $9.90 per mmBtu to be delivered ex-ship (DES) into North Asia, traders said.

Indonesia's Donggi-Senoro LNG export plant has sold a late-June cargo, though price details were not immediately available.

(Reporting by Jessica Jaganathan in SINGAPORE and Oleg Vukmanovic in LONDON; Editing by Tom Hogue)