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GLOBAL LNG-Production outages in Asia lend slight support to prices

Published 30/06/2017, 07:30 pm
© Reuters.  GLOBAL LNG-Production outages in Asia lend slight support to prices
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By Mark Tay and Oleg Vukmanovic

SINGAPORE/LONDON, June 30 (Reuters) - Asian spot LNG prices edged up this week as production outages in Australia, Thailand and Russia provided the spot market with some support after multiple weeks of muted activity in the region.

Spot prices for August delivery LNG-AS edged higher to$5.50 per million British thermal units (mmBtu) 10 cents higher than last week, said five trading sources on Friday.

Production at the Malaysia-Thailand Joint Development Area (JDA) A-18 block in the Gulf of Thailand, and Australia's Karratha Gas Plant that hosts the North West Shelf (NWS) project was hit by outages on June 24. Meanwhile, Russia's sole LNG plant at the Sakhalin-2 project was stopped for a planned maintenance from mid-June until mid-July. series of outages in the region would have typically caused spot prices to spike, traders said, adding that the limited price rise underscored how thin North Asian demand was.

Deal and market activity has been muted despite North Asia heading into the peak summer demand season as inventories in Japan and South Korea remain full.

"All (the North Asian) buyers have stocks, and don't see any urgency to buy," a trader said. "India also will slow down now as a good monsoon means electricity consumption goes down."

The supply disruptions failed to fully reverse weak Asian spot prices, tightening spreads with key European benchmarks to about 50 cents, and helping sustain a three-month trend of rising deliveries to the continent.

The trend took on a global dimension with spot LNG prices in Japan, Mexico, Spain, Britain, Argentina and the United States trading within the closest range seen since 2009/2010, Thomson Reuters LNG analyst Mathilde Jacobsen said.

Tightening global spreads, such as between Asian and European markets, reflect weak Far East demand and healthy supplies, although there is still no underlying convergence between U.S. Henry Hub gas prices and spot LNG prices on international markets.

With more LNG arriving on Europe's shores, receiving terminals discharged more gas into local grids, terminal send-out data showed.

Outages at North West Shelf, affecting three of five producing trains, had limited impact on spot prices because the plant mostly supplies Japanese customers who have healthy stored inventories, thus curbing spillover into spot markets.

Production at Train 2 is scheduled to restart between July 1-3, while Train 3 is expected to start up over July 10-15, according to trading sources.

Operations at the JDA A-18 natural gas field in the Gulf of Thailand have yet to resume, Thai energy company PTT said on Friday. The firm declined to specify when operations would restart, but added that it was not seeking LNG imports due to sufficient reserves. (Editing by Vyas Mohan)

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