July 2 (Bloomberg) -- Shipments of liquefied natural gas to Asia from the Atlantic Ocean area may shrink by about 73 percent this year as Japan and South Korea, the world’s biggest buyers, cut imports, said an official from Repsol YPF SA.

Supplies of spot LNG from projects from countries such as in Nigeria, Equatorial Guinea, Egypt and Algeria may fall to about 4 million metric tons this year, or to 2006 levels, from about 15 million last year, said Strategic Planning Director Ane Arino Ochoa at Spain’s largest oil company.

“We expect a reduction in LNG traded this year because of the economic crisis,” she said after speaking at the Next Generation LNG conference in Singapore yesterday. “There will be a surplus of LNG in the global markets in the short term.”

Japan and South Korea have slashed purchases of the cleaner-burning fuel as the global recession prompts manufacturers to reduce output, cutting demand for electricity. In Japan, power use fell for a 10th straight month in May after Toyota Motor Corp. and Sony Corp. cut jobs and production.

BG Group Plc was the biggest supplier of Atlantic region cargoes to Asia last year when prices rose by a record to as much as $25 per million British thermal units. Prices have since fallen to about $3, said Hiroki Sato, the general manager of the fuels department at Chubu Electric Power Co.

A Hunt Oil Co.-led LNG venture in Peru, in which Repsol has a 20 percent stake, will start production next year, Ochoa said separately. The venture, which has a long-term contract to supply Mexico’s largest power utility, will sell some cargoes under short-term contracts in the spot market, she said.

Repsol was the sole bidder for a contract to supply an annual 2.5 million tons of LNG over 15 years starting in 2011 to Mexico City-based Comision Federal de Electricidad, Alberto Alvarez, a director at the company’s marketing unit, said in 2007. The remaining supplies from the 4.2 million-ton-a-year facility may be sold to Asia, he said.

LNG is natural gas chilled to liquid form for transportation by tanker to destinations not connected by pipeline. On arrival it’s turned back into gas for delivery to users such as factories and power plants.

-- Editors: Ang Bee Lin, Ryan Woo.

To contact the reporter for this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.

Last Updated: July 2, 2009 01:12 EDT