LNG prices rise slightly on winter demand

LONDON: Spot prices of liquefied natural gas (LNG) in Asia, the world's biggest market for the fuel, rose slightly to around $16.50 per million British thermal units (mmBtu) this week due to winter demand for cargoes, traders said.

Although prices climbed from around $16.30/mmBtu last week, the rate of growth appears to have slowed compared with the past few weeks, due to reduced demand for January cargoes from buyers in Asia.

A source from a producer said the global LNG market remained finely balanced, despite export plants in Norway, Indonesia, Nigeria and Yemen increasing output after surmounting production problems in the previous month.

"We are seeing prices in Asia for late January or early February at around $16.50 or higher," he said.

Analysts at Waterborne Energy said Asian countries imported 5.1 percent more LNG in November, at 14.016 million tonnes, compared with the same period a year earlier - underlining a trend of rising demand for LNG.

"This increase was driven predominately by Japan and South Korea," the analysts said.

But prices were still well below the high of $18 per mmBtu seen earlier this year, when Japanese demand for LNG rose sharply due to a loss of nuclear capacity after last year's Fukushima nuclear disaster.

LNG demand in Japan, the world's largest importer of the fuel, showed signs of increasing within the next few months, with one of its 10 utilities, Chugoku Electric Power Co announcing that it expects 2012-13 spot LNG purchases to surge nine-fold from a year ago to 540,000 tonnes.

In Europe, spot LNG prices were said to have risen from $11/mmBtu last week to around $11.50/mmBtu this week, the source said.

This was despite last week's increase in supply from Yemen and Norway.

Yemen's LNG export terminal loaded its first cargo last week since its gas supply line was blown up in late October, according to ship tracking data.

Norway's Statoil restarted production at its Hammerfest LNG plant in the Barents Sea after a power failure forced a partial evacuation of the facility on Nov. 19.

Center>Copyright Reuters, 2012