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Weekly Summary

LNG: May 6-10: Ample supply regardless of trouble at Gorgon project

--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery hovered around $10.35-10.65 once. In the wake of a trouble at the 15.60 mil mt/year Gorgon project in Australia, prices strengthened from before-holiday levels; however, ample supply weighed on the market.

The 5.20 mil mt/year No.2 liquification train at the Gorgon project stopped operation on Apr 30 due to the troubles with the compressor. As of now, the outage period was heard for five weeks. Some expected that the train would resume operation soon; however, "Considering the large size of the project, where one liquification train has over the 5.00 mil mt/year output capacity, we cannot avoid some impacts on the market from the troubles" (a Japanese company).

In the spot market, however, supply has remained ample, and most end-users have not rushed to procure cargoes due to the off-demand season. Amid this, following portfolio players, end-users have moved to sell their extra cargo in the Northeast Asia market. PetroChina, European Glencore, French TotalEnergies, German Uniper, and SEFE, a major state-run energy company in Germany, have placed offers for Jun-Jul delivery at a premium to the DES Northeast Asia spot quotations. Against ample offers, a buyer witnessed in the market was solely ENN Energy Holdings Ltd, an independent company in China that has placed bids for first-half Jun delivery at $9.70.


--FOB Middle East, DES South Asia and the Middle East

In the Middle East, a fresh spot demand came out from Kuwait but buying interest from the whole Middle East was still tepid. In particular, in the UAE, gas demand as a fuel at thermal power plants was weak since output from the 5,600MW Barakah nuclear power station and 2,000MW Al Dhafra power station was smooth. An end-user from the Middle East said, "Seasonal demand might be increasing at the moment since temperatures in the Middle East have been growing, but the rise in temperatures is actually in line with previous years. Compared to normal, the change in demand might be limited."


--FOB Atlantic, DES Europe and South America

In London, the capital of Britain, the maximum daily temperatures were expected to be in the low 20s Celsius until early next week. Meanwhile, inventory data released by Gas Infrastructure Europe indicated that the natural gas stock level in Europe was 62.84% compared to the full capacity as of May 7, maintaining a high level. In Brazil, flooding in the state of Rio Grande do Sul, located in the southern area, due to the heavy rain since the end of last month has caused a blackout. In the market, "The blackout may affect gas demand negatively" (a Japanese company) was heard.


Tokyo : LNG Team  Yamamoto   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.