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GLOBAL LNG-Cold snaps, Australian outage spur spot price to two-year high

Published 17/12/2016, 03:35 am
© Reuters.  GLOBAL LNG-Cold snaps, Australian outage spur spot price to two-year high
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By Oleg Vukmanovic

MILAN, Dec 16 (Reuters) - Asian spot liquefied natural gas (LNG) prices hit new 2016 highs this week as Japanese utilities braving cold weather snapped up shipments in a Russian tender, potentially to substitute lost Australian deliveries.

Spot prices for Asian LNG LNG-AS in February jumped to $9.30 per million British thermal units (mmBtu), the highest since January 2015, corresponding to Tohoku Electric's purchase price of a cargo from Russia's Sakhalin II plant.

Low temperatures are spurring gas demand for heating across Asia's top gas-consuming economies such as China and South Korea, as well as Japan.

In its tender, Sakhalin II sold its February cargo to Tohoku, while a second Japanese player said to be JERA paid around $8.10 per mmBtu for the March shipment, trade sources said.

Excluding weather drivers, some Japanese utilities are having to stake out spot supplies to replace a two-week long outage at Chevron (NYSE:CVX) Corp's giant Gorgon export facility. is not a customer of Gorgon, but Chubu Electric, which is part of a joint venture called JERA, depends on supplies from the project.

A Chevron spokesman said on Friday Gorgon's first production line remained offline, and sources said it could stay shut well into January. It's newly-installed second line closed briefly last week, stoking concerns over supply from the project.

Korea Gas Corp soaked up between six and 10 shipments spread over December, January and February as part of its latest tender awarded late this week, though price details were scant, traders said.

Dealers in the Atlantic benefited from urgent demand in Mexico. The country's state-run power utility CFE issued a call for two cargoes for delivery in the second half of December.

According to one source, Swiss-based trading house Trafigura and U.S. producer Cheniere sold one cargo each at double-digit prices.

Looming strike action meanwhile by natural gas workers in Peru from Dec. 29 could cripple exports from Royal Dutch Shell's LNG plant there.

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