Global LNG-Prices snap bearish streak, Australia's NWS awards tender

Fri Aug 8, 2014 2:34pm EDT

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MILAN, Aug 8 - Asian spot liquefied natural gas (LNG) rose for the first time in six months as tentative signs of a demand pick-up emerged from buyers in India, Brazil and Dubai while Australia awarded its latest supply tender.

Prices rose as spot market activity remained constrained by healthy stocks at key consuming countries.

Spot LNG LNG-AS for September delivery climbed to $10.60 per million British thermal units (mmBtu) this week, compared with $10.50 per mmBtu last week.

Prices in Asia, the world's biggest buyer of the shipped fuel, have plunged close to 50 percent since hitting winter peaks of $20.50 per mmBtu in February.

Traders said that Brazil's state-run Petrobras had bought four cargoes so far. It chartered vessels to pick up two cargoes from Qatar and a cargo apiece from Spain and Nigeria, one source said.

The importer, whose demand for LNG is triggered by irregular rainfall depleting the country's hydroelectric reserves, is said to have some demand for October and November delivery, a separate trader said.

Middle Eastern gas importer Dubai also shows some signs of demand, while India's Reliance, GSPC and Gail are also showing demand further out.

Australia's North West Shelf project awarded at least a cargo apiece to Shell and Norway's Statoil following a recent tender, traders with knowledge of the matter said.

The NWS sell tender for four cargoes loading in October and November was launched last week. Early indications suggested that other companies might also have won shipments.

The transaction value was around $12 per million British thermal units on a free-on-board basis, one trader said.

Attention was shifting to trading for October loading cargoes. Some players were looking for floating storage as they expect a jump in prices once heating demand picks up in countries such as Japan, South Korea and China towards the end of the year.

Trading house Glencore and German utility E.ON are among those betting on a rebound in the market in the winter, leasing LNG tankers for storage purposes. Several other market players were taking the same view, chartering tankers for three to six months, a shipping source said.

The play is triggered by a market structure known as contango, in which prices for immediate delivery are cheaper than later months. Spot prices for the first half of October were about 50 cents higher than for September.

Unlike crude oil, storing LNG on tankers is unusual and generally seen as a risky bet, given the high costs and the fact that cargoes degrade over time by evaporating. (Reporting by Oleg Vukmanovic; editing by Jason Neely)

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