| PERTH/LONDON, March 23
PERTH/LONDON, March 23 Asian LNG prices for
April rose closer to $16 per million British thermal units
(mmBtu) this week, with cargoes delivering in May already priced
above that level as customers stocked up on summer supplies.
Last week, Asian prices were around $15.70 to $15.80 per
The world's top LNG buyer, Japan, is headed into summer with
just two of its 54 nuclear reactors online as public safety
concerns, following the March 2011 tsunami that triggered a
nuclear crisis, have kept reactors that were shut for
maintenance out of commission.
Japan's eagerly-awaited decision on whether to restart its
nuclear fleet that previously produced nearly a third of the
country's electricity is set to underpin domestic demand for LNG
as well as influence the direction of global gas prices.
A vote in favour of averting potential power shortages by
restarting lost output of atomic plants will erode demand for
substitute fuels such as LNG, potentially weakening prices
worldwide and releasing more supply to markets outside Japan.
A shift away from nuclear will drive demand for seaborne gas
deliveries and probably necessitate the build out of Japan's
gas-fired power industry, guaranteeing medium-term growth in gas
demand on top of recent boosts, according to trade sources.
In the absence of a decision, however, some buyers are wary
of committing themselves to paying for cargoes that may not be
needed if the government decides to restart reactors, a trade
"Japanese buyers are only covering short-term demand as they
await the big political decision on nuclear...the spot market
there is a lot quieter than it has been," he said.
A European LNG producer disagreed with that analysis,
pointing to record import demand into Japan and high utilisation
of gas-fired power plants as LNG is comparatively cheaper than
some alternative power plant fuels, such as fuel oil.
"We also see a lot of re-load interest in the Atlantic Basin
on typically 10 percent of Brent crude price, or JCC level (the
Japanese Crude Cocktail), which if you ask me indicates healthy
demand in the Far East," he said.
LNG in Asia is typically linked to the price of crude oil,
or a basket of crude oil grades, including the JCC.
In Europe, only Spain, Italy, Turkey and Greece showed any
demand for spot LNG cargoes. "And the only demand from Spain is
related to re-exporting cargoes to other markets, mostly in
Asia," the producer said.
(Reporting by Oleg Vukmanovic; Editing by Anthony Barker)