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Asia-Atlantic LNG rivalry spurs spot price to 4-year high

By Oleg Vukmanovic

Petroleumworld 06 18 2018

Asian spot liquefied natural gas (LNG) prices hit summer highs not seen since oil and gas prices plunged in 2014, as Mexico and Egypt vied with North Asian consumers for supply constrained by global production outages.

Spot prices for July LNG-AS delivery in Asia jumped to $11.60 per million British thermal units (mmBtu) this week, up $1.80 per mmBtu versus last week. August prices were seen trading up to 10 cents higher.

The rally was driven by strong Chinese consumption, major South American purchase tenders, plant outages, as well as some producers amassing supply, trade sources said.

Sharp price gains forced portfolio players and end-users in Asia to urgently fill short positions, with some potentially paying well in excess of $11.60 per mmBtu, though this could not be confirmed.

Producers were offering August cargoes at $12 per mmBtu, an Asia-based source at a producer said.

An Omani cargo was sold to an unidentified buyer for August at an estimate $11.50 per mmBtu, traders said.

S&P Global Platts said trader Trafigura submitted a firm bid at $11.50 per mmBtu for a Aug. 22-26 cargo for delivery to Tokyo Bay during its Market on Close assessment process on Thursday.

Production setbacks in the United States, Australia and Malaysia tightened supply.

Malaysia's 24 million-tonnes-per-annum Bintulu export complex delayed and potentially cancelled some shipments due to unspecified technical issues, traders said.

Chevron's Gorgon LNG and ConocoPhillips' Darwin plants in Australia recently returned from partial outages.

In addition, the third production unit at Sabine Pass in Louisiana shut on May 15, but has now returned to service.

The APLNG plant on Curtis Island off the east coast of Australia will also undergo a partial maintenance over July, August and September, affecting half of a train.

In terms of purchase tenders, Mexico's state-run power utility CFE unveiled demand for 23 shipments due between June and September.

Eleven cargoes were for the country's Altamira terminal and 12 were for Manzanillo. The winners of the tenders could not be immediately confirmed.

Egyptian Natural Gas Holding Company seeks nine cargoes for delivery in July-August.

On the supply side, Angola offered a cargo for August delivery, with potentially some cargoes available from Australia and Russia.


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Story by Oleg Vukmanovic, editing by Louise Heavens from Reuters. 06 15 2018

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