Global LNG prices lifted on demand from Japan and India

LONDON/SINGAPORE (Reuters) - Asian spot LNG prices extended gains with demand coming from India and Japan, while recent export disruptions from Peru left Royal Dutch Shell shopping for replacement supply.

A view shows a tower flaring gas at an LNG processing plant operated by Shell and others in Bonny Island, in Rivers state, Nigeria June 21, 2017. REUTERS/Paul Carsten

Higher prices triggered a supply-side response with Atlantic producers including Nigeria, Angola, Abu Dhabi and Egypt targeting sales into Asia.

Tangible signs of supply emerging from new projects may restrain further price gains.

Loading dates for the first two commissioning cargoes from Chevron’s new Wheatstone project, also in Australia, should add more supply in early to mid-September, a trader said.

Wheatstone’s first cargo is scheduled to load in the first week of September and likely to go to Japanese trading giant JERA. A second shipment on Sept. 18 should go to Kuwait Foreign Petroleum Exploration Company, which has a 13.4 percent stake in the plant, but that cargo would be marketed by Japan’s Itochu, a trader said.

Meanwhile, a ramp up in feed gas flows into Cheniere Energy’s Sabine Pass liquefaction plant in Louisiana indicates that the facility’s fourth production line has entered service.

Scheduled maintenance on one of three production lines at Chevron’s Gorgon project in Australia, due in September, could offset some of the impact of new supply growth.

Spot prices for Asian LNG for September were at $5.75 per million British thermal units (mmBtu), 10 cents above last week’s levels.

As the sole exporter of Peruvian cargoes, Shell was forced to pick up added replacement supply via the spot market, although the plant recently resumed export following a multi-week suspension caused by bad weather, traders said.

Prices were lifted partly by hot weather that prompted higher gas burn in Japan. As a result Tohoku Electric awarded its tender for a single delivery in late September to a major trading house, a source said, at a price of about $5.90/mmBtu.

According to two trade sources, top producer Qatar has committed much of its production for August and September, potentially another bullish factor influencing prices.

But another trader said Qatar was still marketing September cargoes, and that about a week ago it might have sold a cargo earmarked for Spain - under its so-called operational flexibility mechanism which frees up prompt cargoes for sale.

It was unclear if the two buy tenders launched by Indian companies had been awarded.

GSPC sought a cargo for August delivery and Indian Oil Corp last week tendered to buy a September cargo.

Several new Qatari cargoes have been sold to Egypt via third-party traders, a trade source said, although details were scant. Traders this week said Qatar had turned down several requests to sell fresh supply to Egypt.

Nigeria LNG was offering to sell two cargoes loading in the middle of August, traders said. A sell tender for a cargo offered by Abu Dhabi Gas Liquefaction Company closed on Thursday, as did a separate sell tender launched by Angola.

In addition, there are upcoming loadings due from Egypt’s Idku liquefaction plant.

Reporting by Oleg Vukmanovic and Mark Tay; Editing by Edmund Blair