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PIRA: LNG storage issues central to pricing

LNG Industry,

How to store LNG is becoming a central issue to price, according to the latest analysis from PIRA Energy Group.

In the US, looser balances are prompting another price markdown. In Europe, the Russia/Ukraine conflict continues to influence market fundamentals.

LNG storage

How to store LNG is becoming a central issue to price. A long LNG market will place increasingly more focus on where storage capacity exits, who owns it, and how much capacity is spare. The US will be a central battleground for future storage valuation.

Heating and weather impacts

With eight remaining reports from the Energy Information Administration (EIA) covering the heating season, the opportunity to make progress in lessening the storage overhang from above-normal heating loads or weather-interrupted production is disappearing. Forecasts for February weather will probably result in a letdown for any surge in weather-related demand.

Russia vs Ukraine

A central point of focus in the week ahead should be why cuts in Russian gas exports are no longer exclusive to the Ukrainian corridor. Russia continues to cut gas supplies to the market because buyers are keeping nominations low ahead of injection season. The lower nominations are a combination of a desire by buyers/storage holders to withdraw more gas, growing availability of LNG and Norwegian supplies, and the outlook that shows the Russian gas that buyers are required to lift in the contract year will be substantially less expensive in 2Q and 3Q15.

Adapted from press release by Katie Woodward

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