Global LNG Prices Steady, Demand Remains Weak

Asian spot liquefied natural gas (LNGLF) (LNG) prices stabilised on Friday, taking a breather from the steady decline seen since September, as demand remained weak in an oversupplied market.

 

The spot price for January was slightly higher at around $9.80 per million British thermal units (mmBtu) on Friday, up from around $9.50 the previous week. Prices for February were around $10.00 per mmBtu.

 

One supportive factor for the market was the closure on Monday of Europe's only plant that produces LNG, for an indefinite period, due to a gas leak.

 

Statoil's plant processes gas from the offshore Snoehvit field in the Barents Sea and has the capacity to produce up to 4.3 million tonnes of LNG per year for transport by tanker.

 

Traders awaited the first shipments from BG Group (BRGXF)'s flagship gas project, Queensland Curtis LNG, due before the end of the month.

 

"There's a bit of interest in it because of the quality," one trader said.

 

"No one has ever marketed coalbed methane LNG in the spot market so it will be interesting to see where the cargoes go."

 

Queensland Curtis is the world's first project to turn gas from coal seams into LNG.

 

Earlier this week the company said it had agreed to sell its Australian QCLNG Pipeline business for $5 billion as part of a turnaround plan after a string of production downgrades.

 

Lower oil prices continued to weigh on the LNG market, as Brent crude fell to its weakest level since 2009 on Friday, slipping towards $62 a barrel on concerns over a global supply glut and weak demand.

 

"Sharp falls in oil prices in recent months have brought down Asian spot LNG prices significantly," National Australia Bank (NABZY) said in a commodities note.

 

"It is a matter of time before import prices reflect the recent tectonic shifts in spot prices, combined with a weaker Japanese demand outlook from imminent restarts of some nuclear reactors."

 

Asian liquefied natural gas (LNG) prices are expected to fall by up to 30 percent in 2015, according to a survey of analysts and consultants, as oversupply and the impact of lower oil prices kicks in.