Reuters are reporting that global natural gas markets were roiled last week as an earthquake in Papua New Guinea caused a large-scale supply disruption of LNG while a late winter blast in Europe triggered unprecedented price spikes.
ExxonMobil Corp has declared force majeure on exports from its Papua New Guinea LNG project, which has been shut since a powerful earthquake.
As a result, Asian spot LNG prices jumped by 5% since last week, to US$8.80 per mmBtu.
Exxon is having trouble gauging the extent of the earthquake’s damage, given the remoteness of the gas field, in the mountainous jungles of Papua New Guinea, 700 km from the export terminal.
The outage has left several North Asian buyers seeking replacement cargoes in the spot market, leading to a further rise in market activity, which already hit records in January.
Several importers for China as well as Taiwan’s CPC Corp are seeking to replace disrupted contracted supplies from Papua with short-term delivery cargoes from the spot market.
Other traders said on Friday the seasonal drop-off in demand in North Asia – which includes Japan, China and South Korea, the world’s top three buyers – as winter ends and temperatures rise prevented a bigger price rise.
Spot LNG prices for May were already US$1 lower than April’s, at around US$7.75 per mmBtu.
The market situation has also been eased by increasing supplies from Malaysia’s Bintulu LNG export facility, which had seen disruptions in recent weeks.
While the winter in North Asia is showing signs of tapering off, most of Europe has been caught by a wave of extreme cold late in the season, which pushed up British spot natural gas prices to record highs of 275 pence per therm on 1 March, the equivalent of over US$30 per mmBtu, and up 130% from the last close in February, and up 400% since the end of December.
The spike was a result of extreme cold across western Europe, caused by unusual Siberian winds which the media has dubbed “The Beast from the East” and which caused a surge in gas demand for heating as temperatures plummeted.
European importers were vying with bids from Asia for spot LNG cargoes from Qatar and the US.
With warmer weather approaching in most of Europe, traders said the supply squeeze would likely ease into next week.
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/05032018/global-gas-markets-roiled-by-papua-new-guinea-earthquake/