Global LNG Prices Dip with Tender Transaction Levels

 

LNG for May delivery in Asia traded at around $4.30 per million British thermal units (mmBtu), compared with $4.50 per mmBtu last week.

 

Tenders in Taiwan, Thailand, Indonesia, Argentina and Papua New Guinea were mostly awarded at prices in the low- to mid-$4 per mmBtu range this week, sources said.

 

Argentina secured supply from multiple companies following the closure of its 19-cargo buy tender on Tuesday, although their names could not be confirmed.

 

With Asian prices now virtually tied with European gas markets, cross-basin trade has ground to a halt with production in each zone serving local demand.

 

Gas prices at Europe's benchmark trading hub, Britain's National Balancing Point, are currently around $4.20 per mmBtu, a mere 10 cents discount to Asia levels.

 

Factoring in shipping costs, the difference is too slight to warrant diversions from Atlantic to Pacific markets, sources said.

 

Facts Global Energy, a consultancy, even expects Asian spot LNG prices to run at discounts to Europe ones for some periods as more supply floods in from U.S. and Australian plants.

 

"Beyond 2020, Asia will slowly regain its premium status. But until then, the two regional price benchmarks will track closely together," it said in a note.

 

"With a new (production) train starting up every two months on average through 2019, globally there is a huge oversupply of LNG," it said, adding that Europe will import significantly more as supply booms and prices decline.

 

This week, Russian gas company Gazprom and Belgium's Fluxys signed a deal to develop small-scale LNG import terminals that could help power trucks and ships with the fuel."