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Oil report

Global LNG-US import surge stutters as prices fall

NEW YORK, May 8 (Reuters) - U.S. gas prices tumbled this week, dampening the potential for a continued surge of U.S. liquefied natural gas imports, as UK gas prices were once again more favourable to Atlantic Basin suppliers.

Henry Hub cash gas prices were down 24 percent in the last six trading days, after a 36 percent rise in the previous nine days, pushing the netback for LNG producers back in favour of the UK.

On Friday, U.S. gas prices for weekend delivery were $3.42 per million British thermal units, compared to UK benchmark gas prices around $4.20 per mmBtu.

According to Waterborne Energy netback calculations, only Trinidad producers would find a more attractive netback on the U.S. East Coast. Producers is Algeria, Egypt, Nigeria and Qatar would find better margins sending gas to Europe at current prices, Waterborne figures said.

“We did see a surge about 2 bcf per day to the U.S. in April, followed by a period where we saw the UK NBP spread converge and then cross, but looking at what the market’s doing this morning, it’s pounded that right out of the market,” said Andrew Bradford, analyst at Bentek Energy.

U.S. imports are set to slip slightly in May, to around 55 bcf compared to 63 bcf in April, due in part to a persistent problem hampering production in Nigeria.

In Asia, spot LNG prices were seen around $3.90 per mmBtu this week. Demand has tumbled in Asia due to the recession, knocking prices down from highs above $20 per mmBtu seen last summer.

India and China have been seen picking up some of the slack from falling demand in the large importing nations Japan and South Korea.

Chinese LNG imports were up 4.2 percent in April year on year at 200,105 tonnes. [ID:nPEK372384] Korean imports fell 19 percent year on year in April, the fourth consecutive month of declines, to 1.76 million tonnes.

The fall in Asian demand has left spare capacity in production projects, which is partly being filled by tankers heading west from the Atlantic to fill up with Pacific-sourced LNG.

“Taking advantage of the unwanted volumes are western LNG players who have snapped up strips [LNG cargoes] of varying lengths and terms to supplement their own portfolios,” Waterborne Energy said in a note released late Thursday.

BP BP.L has sent two cargoes -- the British Sapphire and the British Ruby -- from the Atlantic to the North West Shelf project in Australia to potentially export volumes back to the Atlantic Basin. [ID:nN19509056]

GDF Suez and UK utility Centrica have already purchased cargoes from Australia this year for offload in Europe.

South American demand could pick up this year compared to last, with Chile expecting to receive its first cargo from BG Group next month.

In Brazil, the Golar Spirit regasification vessel has moved from the Pecem terminal down to Rio, suggesting the next LNG cargo offload will be in Rio. (Reporting by Edward McAllister; Editing by David Gregorio)

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