Higher Asian prices, European gas stocks trigger LNG flow reshuffle

Updated June 29, 2019

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The LNG price for August deliver in northeast Asia is estimated at $4.80 per million British thermal units. — Dawn/File
The LNG price for August deliver in northeast Asia is estimated at $4.80 per million British thermal units. — Dawn/File

LONDON: Asian liquefied natural gas (LNG) prices rose this week on some demand for summer cargoes, while European prices continued to drop, with an increased price spread between the two regions triggering interest in sending some Atlantic cargoes to Asia Pacific.

The LNG price for August deliver in northeast Asia is estimated at $4.80 per million British thermal units (mmBtu), a 20 cent rise from last week.

Several deals were done this week at a price close to $5.00 mmBtu for August delivery in Asia, but sources said prices could have decreased slightly by Friday after deals closed.

In contrast, front-month gas price on the Dutch hub in Europe dropped below $3.20 per mmBtu.

Decreased price netbacks in Europe are making some producers to consider re-exporting cargoes from northwest Europe to more profitable regions, like Asia or the Mediterranean.

Up to four transhipments of Russia’s Yamal LNG cargoes have been agreed for July, a market source said.

In addition, trading houses and utilities are discussing reloads in Europe, another source said. One of these will take place in France’s Fos terminal on July 9, data from operator Fosmax showed.

Japan’s Mitsui is expected to deliver a European cargo to Japan to cover a position that was initially expected to be supplied by a cargo from new US plant, Cameron LNG, which was eventually sent to France, another market source said.

Cameron exported its second commissioning cargo this week after earlier delays with loadings.

An uptick in Asian demand has improved Asian LNG prices this week. Demand came from Japanese and Chinese buyers, market sources said.

Japan’s JERA was on the market, as well two or three Chinese companies, sources said but added demand was still weak and prices will likely drop back to $4.50 mmBtu if there is not enough rise in Asia’s temperatures to drive gas demand for cooling this summer.

On Friday, JERA bought a September cargo from Vitol at $4.80 per mmBtu at Platts Market on Close window.

Published in Dawn, June 29th, 2019