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GLOBAL LNG-Cold weather, supply outages fuel winning streak

Published 24/12/2016, 01:51 am
© Reuters.  GLOBAL LNG-Cold weather, supply outages fuel winning streak
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By Oleg Vukmanovic

MILAN, Dec 23 (Reuters) - Asian spot liquefied natural gas (LNG) prices remained firm into the final leg of 2016 as cold temperatures in South Korea, China and Turkey fuelled demand while global supply faltered.

Spot prices for Asian LNG LNG-AS in February jumped to $9.50 per million British thermal units (mmBtu), 20 cents above last week's levels.

Two LNG plants led by Chevron Corp (NYSE:CVX) in Angola and Australia's Gorgon were hit with outages that severely restricted output, capping a disappointing year for both projects still grappling with technical difficulties. first production line may resume output next week, one source said.

The current rally, triggered by the partial Gorgon outage last month, found support from buyers rushing to secure supply, one Japanese trading source said, with cold weather playing a major role in spurring gas consumption.

Korea Gas Corp's buying spree earlier this month for six to 10 shipments spread over winter helped drive prices.

Thailand's state-run power utility PTT is seeking a cargo for delivery in February, while Colombia is due to close a tender on Friday for a single shipment, traders said.

In price-sensitive LNG importer India, higher spot prices have muted demand for spot LNG, with tenders drying up, but one source based in Gujarat state said importers were conducting bilateral negotiations for supply outside of the spot market.

Pakistan continues to attract traders' attention as it readies to award two major supply tenders - covering periods of five and 15 years, respectively.

Turkey meanwhile is struggling to meet power demand as cold weather spurs prices to multi-year highs. President Tayyip Erdogan said on Friday Turkey needs to prioritise LNG investments in order to boost gas imports. LNG spot buyers were seen active in recent weeks, snapping up cargoes to meet peak demand and supplement piped gas deliveries from Russia, and elsewhere, sources said.

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