Asia LNG Prices Rebound on Stronger Japanese Demand, WGI Says

Liquefied natural gas prices in Northeast Asia rebounded on stronger Japanese demand and tighter global supply, snapping two weeks of declines, according to the Energy Intelligence Group.

LNG for delivery over the next four to eight weeks rose to $19.30 per million British thermal units in the week ended Jan. 13 from $18.40, the New York-based research company said on the website of its World Gas Intelligence publication. Southwest Europe prices increased to $15.85 from $15.70.

Prices peaked last February at $19.40, according to WGI data. Prices for long-term contracts, generally more than 10 years, are typically linked to the cost of Brent crude or the so-called Japan Crude Cocktail.

“Fuel switching to oil is expected to be limited due to capacity and efficiency restrictions, and at least one Japanese buyer is understood to have approached other players inquiring about possible cargo swaps,” WGI said. “In Japan, two major power utilities are understood to have submitted bids at or just above $19 per million Btu for about three cargoes, competing against buyers in the Mediterranean.”

Prices in North Asia are forecast to be little changed this week, according to three of four traders surveyed by Bloomberg News through Jan. 10. Asian LNG importers typically purchase spot cargoes from December to March to meet peak heating and power demand during the northern hemisphere winter.

Asian buyers are facing competition from Argentina and Spain for Atlantic cargoes, according to WGI. Argentina’s YPF SA will close a tender today for five cargoes delivered to Bahia Blanca and Recalada, according to three people who received the company’s purchase offer.

Angola LNG looks set to restart at the end of this month after a shutdown, providing the market with as many as three spot cargoes, WGI said. Italy’s Enel SpA is selling six shipments from Nigeria LNG that will load in 2014 and next year, two people who received the tender documents said yesterday. They asked not to be identified because they aren’t authorized to speak to the media.

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