Global LNG-Asian LNG Sept demand filled, buyers look to winter

PERTH Fri Aug 5, 2011 6:35am EDT

PERTH Aug 5(Reuters) - Asian liquefied natural gas (LNG) spot prices for September remained just under $15 per million British thermal units (mmBtu) during the week, with most buying for the month done, and buyers looking to fill cargoes for October and beyond.

"The demand has been filled... September buying seems to be done now," one market source said.

Strong demand is likely to continue with top buyer Japan still depending heavily on LNG to replace the nuclear power it lost due to the March earthquake.

"Over the next couple of weeks, it'll probably tighten up to around the $16 level," the source said.

Top buyers Japan and South Korea as well as smaller players in the LNG market usually begin stocking up for the winter as the summer draws to a close and prices are typically at their peak between October and February.

"Traditionally prices spike during the winter period because you have Kogas and Japan adding to their stock... demand depends on how well stocked up they are," another market source said.

In a sign of increasing southeast Asian demand, the gas trading arm of Petrovietnam, PV Gas, said on Friday it was in talks with Qatargas over a contract to import LNG. PV Gas is expected to begin importing LNG around 2013.

ATLANTIC CARGOES FEEL ASIA PULL

Stronger demand and higher prices in Asia appeared to be drawing cargoes eastward.

Spot prices in Spain were said to be trading narrowly above the UK's NBP front-month gas contract, putting it at significant discount to Asia even after adding shipping costs.

A tanker loading at Belgium's Zeebrugge terminal on August 9 will deliver to Asia, sources said.

Global energy trader Gunvor has sold the volumes to a Pacific buyer and Russia's Gazprom also looks set to divert Atlantic production east.

The overwhelming proportion of Europe's LNG continues to be shipped from Qatar, as most traders focus instead on the world's premium market in Asia.

Qatar tends to send gas to Britain irrespective of prices in Asia because it bankrolled Europe's biggest import terminal South Hook, in southwest Wales. That's keeping a lid on British spot prices.

For a table showing LNG tankers heading to Northwest Europe, click here:

For tankers heading to the US, click here: (Editing by Michael Urquhart)

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