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Asian prices continue climb towards double digits

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LNG Industry,

Reuters are reporting that spot prices for Asian LNG climbed towards US$10 per mmBtu, spurred by firm demand from China and gas plant maintenance denting supply.

Spot prices for July LNG-AS delivery in Asia reached US$9.80 per mmBtu, up 20 cents from the previous week. Prices for August delivery will likely trade closer to US$10 per mmBtu.

But the continued spike in prices – currently at a four-year seasonal high – could attract more arbitrage supply from Europe to enter Asia, which could cap gains.

“It’s not a frenzy like it was earlier this week but (prices) are still quite high,” a Singapore-based trader said.

Higher-than-normal temperatures across Asia are also expected to boost LNG prices.

Maintenance and lower exports from several plants are also supporting spot prices.

Malaysia’s Bintulu LNG export plant is experiencing a sharp drop in shipments amid a logjam of vessels stuck outside port, potentially due to technical issues affecting the plant or fields. Feedgas volumes into Sabine Pass fell by a third to 2 billion ft3/day on 15 May and have remained there ever since, reflecting an outage at the plant’s liquefaction train.

The APLNG plant on Curtis Island off the east coast of Australia will also undergo a partial maintenance over July, August and September, affecting half of a train.

Oil major Chevron may have sold an additional spot cargo to a portfolio player at close to US$10 per mmBtu, while Russia’s Sakhalin Energy likely sold a late-July loading LNG cargo at about US$9.80 to US$9.90 per mmBtu.

The Papua New Guinea export plant sold a July loading cargo this week, but price details were not immediately available. Indian Oil Corp also issued a tender seeking a cargo for August delivery into Dahej terminal.

Still, with Chevron completing planned modifications on Gorgon Train 2 in the Gorgon LNG plant off Western Australia, which had been idled since May, more spot supply could cap prices.

Production from the second train of Chevron’s second Australian LNG mega-project at Wheatstone in Australia is expected to start this month, which could also add to the spot market.

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