Huge tenders pull global LNG prices down

February 22, 2014 - 12:00:00 am
LONDON: Asian spot liquefied natural gas (LNG) fell this week as companies injected fresh supplies from Angola and Nigeria into the global market, but traders expected prices to stabilise due to plans for export plants’ summer maintenance.

Cargo prices for April delivery  were around $19.60 per million British thermal units (mmBtu), compared with $20.50 for March delivery last week.

“I can’t see spot prices dropping much lower than this as availability is still tight, and after all these sell tenders are sealed up, there won’t be much left in terms of flexible supply,” a trader said.

A volley of gas cargoes loading from Angola’s Chevron-operated export plant this month surprised traders in light of the project’s poor performance last year. 

Angola launched its third sell tender of the month on Thursday, offering a single cargo which will be awarded on February 28. The bidding window closes on February 26, a trade source in possession of the tender document said. 

Angola’s first LNG shipment of the year is due to unload at Brazilian energy giant Petrobras’s newly commissioned import terminal on February 24. Its second February export is en route to Asia, probably to a Japanese utility buyer, traders said.

Further boosting supply, Portuguese energy firm Galp  has offered to sell up to 30 LNG cargoes from Nigeria over a five-year period, with the first cargoes loading in October 2015. 

Galp’s tender, issued this week, closes in March and stipulates a minimum oil-linked, variable bid at 10.5 percent of the Brent crude price, or $11.50 per mmBtu based on current oil futures. 

In another deal, BG Group bought six Nigerian cargoes from Italian utility Enel in a recent tender to make up for a major supply disruption at its Egyptian plant.  

Trade sources said the company paid 14-14.5 percent of the price of oil for the replacements, putting the per cargo LNG price at $15.70 per mmBtu, not including shipping costs. 

On the demand side, an Argentine tender to buy two cargoes for April delivery was due to be awarded in the next 24 hours.

“We should know who the winner is on Saturday,” another trader who was participating in the tender said. 

Japan’s Meteorological Agency predicted colder-than-average temperatures in the world’s top LNG buyer in April, which may reinforce demand and help keep global prices steady.

Many of the cargoes due to be re-exported from European terminals, specifically Spain, have been pre-sold, meaning they will not be adding to global spot market liquidity. 

At Belgium’s Zeebrugge re-export terminal, Eni has sold out of cargoes until at least end-March and is marketing volumes for the rest of 2014.