Oil and Gas

GLOBAL LNG-Asian spot LNG prices rally in six-year high on rising transport costs

* Winter in Beijing, Tokyo and Shanghai drive heating demand

* Higher travel time from the Atlantic curtails ship availability

* Record supply levels from the U.S. drive freight rates up

RIO DE JANEIRO, Dec 24 (Reuters) - Asian spot prices for liquefied natural gas (LNG) rose to the highest in more than six years this week, with growing shipping rates adding to a supply crunch and high demand for heating, trade sources said.

The average LNG price for February delivery into Northeast Asia LNG-AS was estimated at about $12.50 per million British thermal units (mmBtu), up $1.30 from the previous week ($11.20), the sources said.

Winter in Asia continued to drive strong demand for heating gas, with temperatures in Beijing, Tokyo, Shanghai and Seoul expected to be lower than average over the next two weeks, weather data from Refinitiv Eikon showed.

Supply shortages in Malaysia, Indonesia, Norway, Nigeria and Qatar are making China, the world’s second largest importer of the super-chilled fuel, turn to supply from the U.S., according to traders.

The amount of U.S. gas flowing to export plants are at record levels. Local gas pipeline prices below $3 per mmBtu make the conversion to liquid profitable and is improving prospects for new projects in 2021.

But a congestion in the Panama canal, through which U.S. LNG usually finds a shorter route to Asia, is helping to push freight rates up, they said.

“Cargoes take longer to get to Asia. There are simply no ships available,” a London-based trader said.

Individual spot deals for shipping LNG have been heard as high as $200,000 a day in Asia, another broker said.

On Tuesday and Wednesday, Vitol sold to Trafigura cargoes for delivery between Jan. 31 and Feb. 7 at around $13.55 per mmBtu during S&P Global Platts’ trading period known as market on close (MOC) assessment process, traders said.

Prices ease to below $11 per mmBtu for deliveries in the second half of February.

Spot LNG prices in Asia have soared sevenfold since May, when coronavirus-induced lockdowns hit demand for gas from industries. (Reporting by Sabrina Valle Editing by Chizu Nomiyama)