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Premium deals in China and Japan sends prices above US$10

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Reuters are reporting that Asian LNG spot prices rose above US$10 per mmBtu on 7 December, driven to a three-year high by Chinese and Japanese deals, weather-driven demand and tight supply.

Spot prices LNG-AS for January delivery hit US$10.10 per mmBtu, 25 cents above last week’s levels, while the price for February delivery rose as high as US$10.20 per mmBtu.

Tight shipping availability and rising freight rates constrained Asia’s ability to draw in supply from the Atlantic Basin, adding impetus to price gains as several production plants underwent maintenance.

Indonesia’s Bontang export facility pumped at reduced capacity after a technical fault with a liquefied petroleum gas (LPG) enrichment unit, leaving less supply available for Japanese off-takers, while Chevron’s Gorgon and Wheatstone projects in Australia were also experiencing output cuts.

Falling temperatures in Japan, South Korea and China added to support from continuing nuclear outages, keeping consumption strong and spurring demand to replenish stores with spot purchases.

PetroChina bought a free-no-board cargo loading 13 – 14 January from Australia’s Gladstone LNG project for US$9.50 – US$9.55 per mmBtu, or above US$10 per mmBtu when shipping costs are added.

Kansai Electric paid an estimated US$9.40 per mmBtu for a January cargo from the Australia Pacific LNG project, also topping US$10 per mmBtu with shipping costs.

More deals done above US$10 per mmBtu were reported by traders.

An Angola LNG cargo put up for sale on Thursday for 11 – 12 December loading could find its way on to Asia markets.

A gas leak at Pakistan GasPort’s newly inaugurated LNG import terminal forced a shutdown, prompting cargo delays, diversions or cancellations, but the operator said it expected a restart by the evening of 8 December.

Trade and industry sources put the repair time at 10 days initially, adding that the leak occurred on 28 November.

Pakistan LNG released trader bids for its tender for four cargoes in February, identifying B.B. Energy, Gunvor and Trafigura as the most competitive providers.

B.B. Energy is set to take the 6 – 7 February slot with a 15.7312% oil-linked offer, Gunvor the 16 – 17 February 16-17 slot with 16.0857% and Trafigura the 21 – 22 February and 26 – 27 February slots with 15.8488 and 14.9887% respectively.

India’s GSPC closed a buy tender on 28 November for a cargo due in the second half of December at a price in the low US$9 per mmBtu region.

Peer Gail India purchased a late January and late February cargo. Bharat Petroleum was also due to purchase a 19 – 21 January cargo on 8 December.

In the Atlantic, the focus was on Spain, where gas prices at the PVB trading hub topped US$10 per mmBtu, a signal for spot LNG sellers.

However, interest at those prices was considered marginal and not reflective of the market as a whole.

A short-lived surge in Italian spot gas prices had mostly petered out by 30 November.

Traders also expected Argentina to come to the market soon with demand for summer deliveries.

Tenders by Mexican companies Pemex and CFE for four to five years of supply are also expected in the next week.

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