(Bloomberg) -- North Asia spot liquefied natural gas prices jumped to the highest level this year on increased competition from Europe for the heating and power plant fuel.
The Japan-Korea marker, the benchmark for the region, rose to about $15.3 per million British thermal units on Thursday, the highest since early December 2023, according to traders. This follows a similar gain in the European benchmark.
Unusually cold and windless weather in Europe is draining gas inventories and boosting demand for seaborne LNG shipments, with some traders diverting supply away from Asia. Some buyers in Asia, like those in India and China, are curbing spot LNG purchases because shipments are too costly and alternative fuels are more attractive.
Despite the rise in Asian LNG prices, it still makes more economic sense for US shipments to favor Europe, traders said. Weekly LNG deliveries to Europe are expected to hit the highest level since February next week, according to ship-tracking data compiled by Kpler.
Meanwhile, China — the world’s top LNG importer — isn’t in dire need of additional supply because of brimming inventories in some parts of the country, traders said. That means that the country likely won’t dip back into the spot market unless winter weather turns significantly colder, they added.
More news:
- Producer Angola LNG is offering two cargoes on a DES basis for Dec.-Jan. and March delivery to various locations as far east as Southeast Asia
- Shell purchased an LNG cargo on a DES basis from EnBW for Jan. 18-19 delivery to North Asia at $15.30/mmbtu via the S&P Global Commodity Insights market-on-close platform on Thursday
- Trafigura also purchased an LNG cargo on a DES basis from Engie for Dec. 29-31 delivery to PipeChina Tianjin terminal in China at $15.35/mmbtu
Drivers:
- Japan’s total power generation fell to the lowest in more than a decade in the year through March, dropping below levels seen during the Covid-19 pandemic
- Final power consumption in the previous fiscal year dropped to the lowest level in 28 years, the government data showed
- Recent sanctions against Gazprombank exempted transactions related to the Sakhalin-2 oil and gas project, to the north of Japan, through June 28, 2025
- The Japanese government has remained committed to receiving liquefied natural gas from Sakhalin-2, calling it an important project for the country’s energy security
- READ: Gazprombank Sanctions Won’t Impact Sakhalin-2, Japan Says
- LNG send-out in Europe was at 3.1 TWh/day on Wednesday, latest available data; down 11% w/w: GIE data
- European gas storage levels were ~89% full on Nov. 19, compared to the five-year seasonal average of 91%
- Venture Global LNG received approval from the Federal Energy Regulatory Commission to introduce hazardous fluids to its first liquefaction block at Plaquemines, according to a filing, as the exporter works to start up the plant
- Regulatory approval for hazardous fluids is considered precursor to other pending approvals for producing the plant’s first LNG
- Estimated flows to all US export terminals were at 13.8 bcf/day on Thursday, steady w/w: BNEF
- Train 3 at the Tangguh LNG export facility in Indonesia was disrupted on Nov. 16 due to problems with the ORF train
- Train 3 may resume production at normal rates on Nov. 25
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(Updates with spot market details after the fifth paragraph.)
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