Global LNG: Prices up on tight supply, Indian demand evaporates

Reuters , Sunday 22 Nov 2015

Asian liquefied natural gas (LNG) prices for January delivery rose to around $7.80 per million British thermal units (mmBtu) this week due to tight availability of supply, traders said.

Prices of Asian spot cargoes for December delivery last week were at $7.70 per mmBtu. A trader said this week's price for December was in-line with January levels.

Price direction beyond January will depend to a large extent on the start-up of a series of new liquefaction facilities in Australia, the U.S. and Angola, another trader added, with some misgivings in the market about possible delays.

"But nobody is expecting a good market," he added, referring to bearish prices due to rising supply.

Dubai's Supply Authority was seeking additional cargoes on top of the eight-cargo tender it awarded for delivery across 2016 and 2017, traders said.

Australia's Darwin export plant is offering to sell one cargo in December, and more supply looks set to surface from Indonesian production plants, although details were still sketchy.

Trading house Gunvor was chosen by Pakistan State Oil company to supply three cargoes between end-November and mid-December and it achieved a price expressed as a percentage of Brent crude oil of 15 percent, traders said.

That works out to a level in the high $7 per mmBtu range, given Brent crude is currently trading at $44.58 a barrel.

India's biggest gas importer Petronet LNG is close to renegotiating a major deal with its Qatari supplier Rasgas, lowering the cost of gas shipments and avoiding a $1.5 billion penalty fee for lifting less gas than agreed, two sources said.

Under the new deal, Rasgas will grant relief to Petronet from paying the penalty on the condition that the Indian firm lifts full volumes in subsequent years, said one of the sources.

Gail India, the main recipient of the Qatari LNG via Petronet, has signalled to market participants that it will not be seeking additional spot cargoes next year, likely due to the fact that it will be taking higher volumes of Qatari supply, a trader said.

Pakistan, which is holding a 120-cargo tender, held a clarification workshop on Nov. 17 to address concerns about certain unorthodox conditions laid out in its tender, including one that would allow it to take delivery of cargoes potentially anywhere in the world.

The outcome of the workshop was not clear, but a trader said information should be posted on the Pakistan State Oil company website within days. 

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