* Prices near $14 mmBtu
* Market eyes Japan nuclear capacity
By Rebekah Kebede and Edward McAllister
PERTH/NEW YORK, June 10 Spot prices of liquefied
natural gas (LNG) in Asia were seen closing in on $14.00 per
million British thermal units (mmBtu) the highest seen in the
spot market this year, from about $13.60 last week, on summer
demand and sustained imports by Japan, traders said.
"Offers are clearly above $14.00 per mmBtu, but I haven't
seen any transactions at that level. I think for now we have
reached a maximum price, but you never know," one Asia-based
Asian LNG prices have already risen from below $10 per mmBtu
before the quake to near $14 per mmBtu currently.
Japan continues to face serious shortfalls in electricity
supply in the wake of the March tsunami, with Kansai Electric
Power Co the latest major utility to call on buyers to
cut power use to avoid rolling blackouts.
Kansai said it would need to buy fuel equivalent to 300,000
tonnes of LNG to meet summer power demand due to the uncertainty
as to when it can restart the reactors. That would be on top of
additional purchases of 1.3 million tonnes of LNG equivalent it
has already bought.
But given the uncertainties in Japan's power market,
utilities in the country were seen buying just a few months out.
"They are not trying to buy too far ahead in any great
quantities -- the way that they are doing it seems to be spot
one or two months out," another Asia-based trader said.
The market is also closely watching actions surrounding
nuclear closures in Japan and the effect on LNG markets,
following a statement by government officials earlier in the
week that local opposition could shut down the nation's nuclear
"The LNG markets are put under further strain by the
possible shutdown of all of Japan's nuclear power by a
government driven by public fears about the risks of nuclear
power," said Pan Eurasian LNG analysts in Raleigh, North
Any further growth in Japanese demand will tighten the Asian
LNG market, which is expecting several new importers to come
online in the next few years.
NEW LNG TERMINALS
Thailand will start operations at its regasification plant
in July after a successful test run.
Thailand is just one of several Asian nations including
Singapore, Indonesia, Malaysia, Pakistan, Bangladesh, Vietnam
and possibly Sri Lanka and the Philippines that are expected to
become LNG importers in the next few years, adding to rapidly
growing Asian demand for the supercooled fuel.
The rise in Asian spot prices has increased the premium to
UK benchmark prices in recent weeks, enough to attract Atlantic
Basin cargoes east, if shippers can find scarce spare tonnage.
British futures were around $9.60 per mmBtu on Friday, up
slightly from last Friday, but still more than $4 below Asian
U.S. gas futures at $4.70 per mmBtu NGc1 on Friday were
almost $4.90 below British prices and remained the least
attractive market for LNG shipments.<0#NG-NGLNM=R>
Last week, deliveries of LNG to the United States and Canada
were at 0.7 billion cubic feet per day, down from the 1.2 bcfd
average in 2010, Tudor Pickering Holt numbers showed, a sign of
low prices deterring spot shipments.
El Paso's Gulf LNG terminal in Mississippi will receive its
first commissioning cargo on June 13, joining the ranks of idle
terminals on the U.S. Gulf Coast thanks to low prices.
The first two commissioning cargoes will be delivered by BG
Group, the first arriving on June 13 from Trinidad, and the
second from Egypt on June 27, El Paso told Reuters on Wednesday.
Beyond that though, the terminal is not likely to receive many
cargoes, analysts say. [ID: nN08240884]
In South America, Argentina's new Escobar terminal was
officially opened this week -- the second in the country -- with
the arrival of its first commercial cargo in the SCF Arctic
tanker. The Arctic Spirit tanker from Qatar, delivered by Morgan
Stanley, is also anchored nearby and ready to offload a second
While Argentina is receiving regular deliveries, Brazil
remains quiet, a noticeable change from the record deliveries
seen last year.
For a table showing LNG tankers heading to Northwest Europe,
For tankers heading to the US, click here:
(Editing by Ramthan Hussain)