Global LNG-Asian spot LNG prices climb due to winter demand

Reuters

PERTH/LONDON, Nov 22 (Reuters) - Asian spot LNG pricescontinued to climb toward $19 per million British thermal units(mmBtu), supported by strong winter demand from China, Japan andSouth Korea, while Argentina's second tender award tightenedglobal supplies.

China is facing a gas shortage which has sent it trawlingfor LNG cargoes just as top importers Japan and South Korea arestockpiling supplies for winter.

Asian LNG prices were at around $18.60 per mmBtu onFriday, up from $18.30/mmBtu last week.

China's LNG imports have already jumped 20 percent in theyear to October and will probably continue to rise as thecountry commissions a series of new LNG receiving terminals inthe coming months.

With extra Chinese demand and new import capacity, prices ofthe super-cooled fuel may reach $20 per mmBtu before the end ofthe year, trade sources said.

Last week Qatargas delivered the commissioning cargo of LNGto China's new Tangshan LNG terminal, while its first floatingLNG terminal is expected to start operation nextmonth.

In South America, demand has weakened with the arrival ofthe southern hemisphere summer.

"Spot demand out of Argentina and Chile seems to have pulledback a bit as they enter into their summer season. We could seesome additional spot demand out of Brazil if hydro levels arenot replenished," Waterborne LNG analysts said in a note.

Argentina awarded its second tender in as many months, for15 LNG cargoes next year. Russia's Gazprom will supply10 cargoes into the country's Bahia Blanca terminal.

Spain's Gas Natural Fenosa will deliver two cargoes into theriver terminal at Escobar, with Brazil's Petrobras supplying theother three also into Escobar, a trade source said.

Argentina will pay for a quarter of the cargoes' value priorto the loading date and transfer the rest before the ship entersits territorial waters, a trader said.

The role of pre-payment for LNG cargoes - which can cost upto $45 million - has helped encourage participation in Argentinetenders despite the country's wider credit problems.

On the supply side, Indonesia's Donggi-Senoro LNG has pushedback first production to March 2015 from an earlier target of2014.

This delay means only two new projects - Exxon Mobil's PNG LNG and BG Group's Queensland Curtis IslandLNG - are scheduled to come online in the Asia Pacific region in2014, signalling a further tightening of global LNG supplies.

Asian spot LNG prices are expected to trade on average$1/mmBtu higher this year compared with 2012, BG Group's head ofLNG trading Andrew Walker said at a conference this week.

In India, GAIL's recent offer of regasified LNGdrew strong interest from industrial customers on its pipelinenetwork, the state-run energy firm's chairman B.C. Tripathi saidthis week.

Around 70 companies bid for GAIL's supplies, Tripathi toldReuters, with the price formula based on a combination ofbenchmark U.S. gas prices and crude oil, equating to around$13.50/mmBtu when crude oil trades at $100 a barrel.

Once regasification charges, taxes, duties and pipelinetransportation costs are taken into account, the price of thegas jumps as high as $19/mmBtu, Tripathi said.

The delivered cost of regasified LNG in India exceeds thethe current global spot price for the fuel.

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