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UK gas premium eroded further

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LNG Industry,

Reuters are reporting that Asian spot LNG prices remained on a downward trajectory for a third month as producers fully stocked with supply struggled to place cargoes into a largely saturated market which was also tainted by low demand.


Spot prices for April delivery dropped to US$5.85 per mmBtu, 15 cents below last week levels. May spot LNG fell to US$5.75 per mmBtu.

Purchasing by South Korea, Italy and Japan failed to offset the downward trend.

The latest tender award by Argentina on 10 March for 20 cargoes seemingly lowered the pricing bar even further, and demonstrated how global deals are increasingly being tied to Britain's National Balancing Point gas trading hub - a key price reference point.

In Argentina's tender, where Shell walked away with the bulk of deliveries, winning bids were estimated by traders to carry a relatively small 10 cent premium to forward contracts at Britain's NBP.

Shell is to supply about 18 cargoes to Argentina's state-run Enarsa, with Petrobras and Gas Natural Fenosa each adding a cargo.

Britain's ability to import large amounts of LNG and export it as gas using pipeline links with Europe make it an attractive market of last resort for shippers unable to find better alternatives as the supply overhang grows.

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