Asian gas prices fall below UK costs for first time in over four years
By ANNA SHIRYAEVSKAYA
Bloomberg
Asian gas prices declined below UK costs for the first time in more than four years, doubling the number of shipments expected in Britain this quarter.
Spot liquefied natural gas (LNG) for northeast Asia fell 64% over the past year to 5% less than day-ahead gas on the UK’s National Balancing Point, according to data compiled by Bloomberg. That increased LNG deliveries to the UK 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,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein. “In the short term, this trend will likely reverse.”
LNG imports to the UK, Europe’s biggest gas market, may more than double this quarter from a year earlier, according to Energy Aspects, 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% to $7/MMBtu 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% in the period to 48.7 pence/therm ($7.40/MMBtu) 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, said Alan Whitefield, managing director of gas and LNG consultant AW Energy Solutions.
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