Global LNG-Dec prices rise near $8, mkt tighter toward winter

Fri Nov 6, 2009 10:59am EST
 
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* KOGAS winter tender shows prices near $8 per mmBtu

* Cargoes could head from Atlantic to Korea

* Market watching for U.S. import rise

NEW YORK, Nov 6 (Reuters) - Asian spot prices of liquefied natural gas rose toward $8 per million British thermal units this week, as winter approached and importers looked to bolster supplies, traders and analysts said on Friday.

A winter spot tender by South Korea's KOGAS for delivery of up to seven cargoes was won by a number of suppliers this week for prices ranging from $7.50 to $8 per mmBtu on an ex-ship basis, traders said. [ID:nSP224037]

The prices are higher than most deals seen around $7 for November and are up from the lows seen below $5 earlier this year in Asia.

The deals could involve shippers sending tankers from the Atlantic Basin to the Pacific, a move that has become less common this year due to weaker demand in Asia.

"A Kogas winter tender for the delivery of five to seven cargoes from December forward is being rumored to have been awarded to the following traders; BG, Shell Oman LNG, Excelerate and two deliveries by BP," Waterborne Energy said in a note Thursday.

The BG Group (BG.L) delivery could involve diverting the Methane Princess, currently on its way to the Dragon LNG terminal in the UK, to Korea, Waterborne said.

Other BG supply could come from Nigeria or Equatorial Guinea.

Spot demand in Asia slowed to a halt at the beginning of this year as the recession dented demand in the traditionally thirsty importers Japan and South Korea.

However, trade has picked up in the second half of this year and spot deals have also been seen in Japan for December, adding to activity in India and China.

"Supplies are getting tighter," said one Asian-based trader.

China's demand appetite is relentless, with Sinopec (0386.HK) (600028.SS) seeking Papua New Guinea LNG from ExxonMobil Corp (XOM.N) for 2 million tonnes a year. Both parties have reached a preliminary deal, a key step in moving the project toward final approval. [ID:nSYF537366]

While the LNG market is less slack than it was earlier in the year, there are signs that the United States could be getting a slight increase in November imports as European and Asian stocks spill over.

As new trains in Qatar ramp up production, Qatari producers are beginning to use the short-term supply deals they have with U.S. terminals as an outlet for increased production. [ID:nN03500390]  Continued...

 

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