Asian LNG prices set to spike more this winter

May break previous records as inventories remain low, says executives

SINGAPORE/NEW DELHI:

Asian spot liquefied natural gas (LNG) prices are set to spike further this winter and may break previous records set last winter as inventory levels remain low and producers are yet to ramp up supply, executives said on Tuesday.

Spot LNG prices hit about $29 per million British thermal units (mmBtu) on Monday, and are expected to remain well above $25 per mmBtu this winter, said Jeff Moore, manager of Platts’ Asian LNG Analytics division during the Platts APPEC-2021 conference.

A cold winter earlier this year pushed spot prices to a record high of $32.50 per mmBtu in mid-January as gas inventory was drawn down to meet the demand surge.

Following that, a pickup in economic activities from the easing of coronavirus-induced restrictions in many countries sent demand spiking further, causing gas storage levels to fall to multi-year lows towards the end of summer, said Sid Bambawale, LNG trading manager at Vitol during a separate panel discussion at the conference.

“This week, we start the winter season.. It is going to come down to one thing and that is the weather,” he said, adding that a cold winter will send prices surging further.

Cold temperatures typically increase demand for gas for heating and limited storage capacity means companies are not able to stockpile volumes ahead of time.

Record high Dutch TTF gas prices are also having a direct impact on Asian prices and in turn sending a ripple effect throughout the industry, said Denis Bonhomme, vice president of LNG at TotalEnergies China.

“It is a tense outlook this winter,” he added.

However, high prices and volatility is ultimately not good news for both buyers and sellers, said executives from Russia’s Novatek and US LNG company Cheniere Energy.

Published in The Express Tribune, September 29^th, 2021.

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