Norway pipeline flow drop triggers Global LNG price rise

LONDON, (Reuters) - A uptrend in European beanchmark gas prices was seen with the Norway pipeline flow drop. As a result, Asian spot prices for liquefied natural gas (LNG) alsoedged up this week. This uptrtend has been seen for the first time since last December.

LNG trading has been subdued, however, with many market players at a major industry event in Shanghai.

Prices for May delivery in northeast Asia <LNG-AS> are estimated at $4.50 per million British thermal units (mmBtu), a $0.10 rise from last week but still near their lowest level in three years.

LNG derivatives also traded higher this week.

The rise in LNG prices was due to a pick up in gas prices in the Netherlands and Britain, the two major European gas hubs, because of a drop in supply from Norway through the Langeled pipeline, gas traders said.

The May contracts on both hubs traded above $5/mmBtu on Friday.

With current market conditions, Refinitiv analysts said they expect a 900 million cubic metre reduction in Norwegian supplies for April.

Traders said there could be a correction in European prices next week, however, given that gas markets remain oversupplied due to LNG arrivals and high storage levels.

"I think it is a temporary knee-jerk reaction to lower Norwegian flows. Nothing else has changed," one gas trader said, referring to this week's modest price rise.

PetroChina International (London) offered three spot cargoes of LNG from Russia's Yamal LNG plant for delivery in Europe in May.

Angola LNG also offered a cargo for May delivery.

Traders estimate prices of LNG delivered to Europe to be at around an $0.35/mmBtu discount to the Dutch gas hub benchmark, meaning Asian prices are still at a discount to European prices.

On the demand side, there were two tenders this week for cargoes delivering late this year and next year, suggesting buyers are trying to lock in the current low prices.

India's H-Energy issued a tender for 15 cargoes for delivery over the fourth quarter of 2019 and throughout 2020. The buyer is not expected to award all of the cargoes, market sources said.

GNL Chile is looking for a cargo for late September delivery and a cargo for mid-November delivery in a tender closing April 8, an LNG trader said.

There is also some spot demand in India driven by the gas needs of refineries and power plants, with Indian LNG buyers managing to buy at a discount to Asian prices, a source familiar with the market said.

 MAINTENANCE

A number of production facilities around the world are carrying out maintenance but the impact on prices is seen as minimal as supply remains ample.

Oil major BP has shut down one train of its Tangguh LNG plant in Indonesia for 23-days until mid-April.

In Qatar, some facilities were offline this week, market sources said, and up to two trains in Oman's three-train facility are expected to be on a 15-day planned maintenance this month.

One train at Russia's Sakhalin 2 plant experienced an operational failure on Wednesday but all trains were back online the next day, a spokeswoman for Sakhalin Energy told Reuters.

Meanwhile, strong winds in Norway delayed some of the transhipments of Yamal cargoes at Honningsvag, and two Sabine Pass trains in the United States have been offline since March 22.

Some producers could be carrying out maintenance earlier than scheduled this spring due to the subdued prices, sources said.

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