Global LNG-Asian LNG prices seen increasing ahead of summer

PERTH, March 30 Fri Mar 30, 2012 6:16am EDT

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PERTH, March 30 (Reuters) - Asian liquefied natural gas spot prices have risen to around $16 per million British thermal units (mmBtu) LNG-AS since hitting a low in mid-February as buyers continue to stock up on summer supplies.

Prices for LNG for delivery into Japan, the world's largest LNG importer, were seen around the $16 per mmBtu level and higher for June cargoes, and are expected to continue climbing.

"From now until the end of procuring summer, prices are only going to go one way: up," one market source said.

Japan is bracing for what may be its first summer without nuclear power as safety concerns after a tsunami triggered a nuclear crisis last year ensured that all its nuclear reactors, except for one, remain shut.

The one remaining reactor, Hokkaido Electric's Tomari No.3, is scheduled to go offline on May 5 for maintenance.

Before the nuclear crisis at Tokyo Electric Power's Fukushima plant, about a third of Japan's power came from nuclear utilities and the country has relied heavily on LNG to fill the nuclear gap, with February imports of the fuel up 23 percent year on year.

The country's Nuclear Safety Commission has endorsed computer-simulated stress tests on two reactors, but it is unclear when officials will meet to consider restarts.

Tokyo Electric Power on Friday announced that it has scrapped plans to build two more nuclear reactors at its Fukushima plant, where the tsunami last year triggered the nuclear crisis.

As summer approaches, spot supplies may tighten with Qatargas, the world's largest LNG supplier, planning to shut all three LNG producing units at its Qatargas-1 plant for three weeks of work starting in the third week of April.

However, the Angola LNG project will load its first cargo in the second quarter and will initially sell all of its output on a spot basis to Europe and Asia as it waits for government approval for long-term contracts, according to Waterborne Energy.

Angola had originally planned to supply its LNG to the United States, but with gas prices just over $2 per mmBtu due to a glut of gas from a boom in shale gas supplies, the project is now eyeing European and Asian customers.

In Europe, British gas prices <0#NBPGAS-RTR> were higher this week as a gas leak at Total's Elgin gas platform that has also forced rival Shell to evacuate and shut a nearby gas rig.

On the other side of the Atlantic, however, U.S. natural gas prices dropped to a ten-year low as mild weather and high inventories undercut prices. (Editing by Sugita Katyal)

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