GLOBAL LNG- European gas spike triggers Asian price hike
LONDON, (Reuters) - Asian spot prices for liquefied natural gas (LNG) tracked a spike in the European gas market this week, rising for the first time in three weeks.
Spot prices for October delivery to northeast Asia <LNG-AS> are estimated at $4.90-$5.20 per million British thermal units (mmBtu), against around $4.40 a week ago, market sources said.
Traders quoted various levels for Asian prices as they moved sharply in reaction to developments on European gas market.
European prices jumped this week on a requirement for Russian producer Gazprom to cut gas flows via the Opal pipeline into Germany, an announcement of problems with at least five French nuclear reactors and news of the Dutch Groningen gas field halting production eight years earlier than initially planned.
The October contract on the Dutch market, a benchmark for LNG arriving in Europe, has risen by more than $1 since the end of last week and traded over $5/mmBtu on Friday.
Asian and European physical gas markets have become more linked this year due to rising spot volumes, an increase in LNG paper trading and hedging.
On Friday, sources said Cameron LNG, a liquefied natural gas facility in Louisiana operated be Sempra Energy, has declared force majeure due to technical problems at the export terminal.
The scope of the problem was not immediately clear but the impact on physical LNG prices was expected to be limited.
"It's a relatively small project for now, and European gas strength probably has more impact on JKM (the Japan Korea Marker)," an industry source said.
Another trader said the impact would be limited because demand in Asia remained largely subdued.
DEALS AND TENDERS
At the beginning of the week, traders said deals in Asia were done at or below $4.50/mmBtu.
They included Japan's Jera October purchase from Australia's Ichthys, as well as purchases by Indian companies, Indian Oil and Reliance Industries, for October, and Argentina's IEASA deal for September.
China's Guanzgshou Gas bought an October cargo from Glencore, and November and December cargoes from Mitsui, a trader said.
By the end of the week, a seller said his company made deals above $5.00/mmBtu for October.
Kuwait Petroleum Corporation (KPC) was reported to have awarded a mid-October delivery tender at $5.40/MMBtu. This could not be immediately confirmed.
In terms of tenders, Japan Nippon Steel and KPC were seeking to buy cargoes.
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