LNG Trade Slows as Northern Hemisphere Cold Weather Recedes, Analyst Says

The number of liquefied natural gas carriers anchored off Fujairah, the United Arab Emirates, has risen to 20, signaling a lull in the trade of the cleaner- burning fuel amid the receding cold weather, a consultant said.

“At this moment we see 20 ships,” Zach Allen, president of Pan EurAsian Enterprises Inc., said in an e-mail yesterday. “That would suggest a slowdown.” There are about 333 LNG vessels in service, according to data compiled by Bloomberg.

France’s LNG imports fell 4 percent this month from a year earlier, supplies into Belgium’s Zeebrugge terminal declined 21 percent while Spanish LNG imports gained 0.2 percent, according to a chart by the U.S. consultant.

Rising temperatures have reduced demand for heating in the Northern Hemisphere after a colder-than-expected winter. Japan, South Korea and Spain, the three biggest LNG buyers in the world, reduced imports by a combined 1.5 billion cubic feet a day in 2009 from a year earlier, JPMorgan Chase & Co. said in a report in March.

“French LNG imports are falling behind the rate of last year, as is the Belgian activity at Zeebrugge,” Allen said. “All this suggests to us that pipeline activity may be higher this year than last.”

Pipeline gas imports into Europe from Norway and Russia, which are under long-term contracts indexed to oil prices, may be demonstrating more price flexibility to stave off cheaper spot LNG supplies, said Allen.

LNG imports by the U.S. this year may be at 1.63 billion cubic feet a day on average compared with a five-year average of 1.5 billion, according to Pan EurAsian and a report by JPMorgan.

“LNG use in the US markets is dropping, and it does look like a repeat of last year,” Allen said. “For that reason we have not changed our estimate of U.S. LNG use for the year, despite the strong start to the year due to very cold weather.”

LNG is natural gas chilled to minus 260 degrees Fahrenheit (minus 162 degrees Celsius), putting it in a liquid state for shipping by tanker.

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

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