Sinking Gas in Asia Sees Tankers Heading West: Chart of the Day

Asian gas prices declined below U.K. costs for the first time in more than four years, doubling the number of shipments expected in Britain this quarter.

The CHART OF THE DAY shows that spot liquefied natural gas for northeast Asia fell 64 percent over the past year to 5 percent less than day-ahead gas on the U.K.’s National Balancing Point, according to data compiled by Bloomberg. That increased LNG deliveries to the U.K. to seven tankers in January from one a year earlier, according to port and ship-tracking data.

“Over the last few years we have seen cargoes diverted from the Atlantic to Pacific basin given the wide price differentials between LNG and NBP,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said by e-mail Thursday. “In the short term this trend will likely reverse.”

LNG imports to the U.K., Europe’s biggest gas market, may more than double this quarter from a year earlier, according to Energy Aspects Ltd., a consulting company in London. Spot LNG in Asia, which uses three-quarters of the world’s supply of the gas chilled to minus 170 degrees Celsius (minus 274 Fahrenheit), declined amid warmer-than-usual weather in the region and as oil’s biggest drop since 2008 made long-term contracts cheaper.

Spot LNG for northeast Asia fell 6.7 percent to $7 a million British thermal units in the week ending Feb. 2, according to World Gas Intelligence assessments for cargoes to be delivered in four to eight weeks. Day-ahead prices on the NBP rose 10 percent in the period to 48.7 pence a therm ($7.40 per million British thermal units) on Feb. 2, according to broker data compiled by Bloomberg.

About 27 percent of the 299 billion cubic meters (10.6 trillion cubic feet) of LNG shipped a year comes from spot and short-term contracts, according to the International Group of LNG Importers. While northwest Europe won’t draw all the available spot cargoes because of the market’s immaturity and low liquidity, imports in March will be higher than in previous months, Alan Whitefield, managing director of gas and LNG consultant AW Energy Solutions, said Wednesday by e-mail.

Before it's here, it's on the Bloomberg Terminal.