Russian supply fears intensify Asian demand for winter gas
Bloomberg July 21, 2022
Asia’s top liquefied natural gas importers are accelerating efforts to secure fuel for winter on fears that Russia will curb supply and further tighten the global market.
South Korea purchased more than a dozen cargoes for delivery this winter, while major Japanese utilities are looking for supply from September, according to traders. Taiwan’s CPC, which had been quiet for months, returned to the spot market seeking to pick up supply for this fall, the traders said.
The surge in activity coincides with the end of scheduled maintenance for Russia’s biggest natural gas pipeline to Europe. The key link resumed early Thursday, but any disruption or reduction of supply will force Europe to procure more LNG -- putting them in direct competition with Asia, home to the world’s top importers of the super-chilled fuel.
Gas buyers in Asia want to lock in winter shipments before a potential global price spike or Russia-induced shortage. Spot prices for natural gas in Europe and Asia are already trading at an all-time high for this time of year.
Asia’s LNG price discount to Europe shrank in the last week, indicating that utilities in the Pacific are paying more to try to attract more supply. Europe has been outbidding Asian rivals for spot LNG supply so far this year due to an acute need to refill inventories.
To be sure, China -- the world’s top LNG importer last year -- has been noticeably absent from the spot market due to virus restrictions curbing demand for the fuel. If China’s economic activity picks up, that could quickly change and result in fewer LNG cargoes for Europe, Samantha Dart, Goldman Sachs Group’s head of natural gas research, told Bloomberg Television.
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- GSPC purchased an LNG cargo on a DES basis for Sept. 2 delivery to India at about $36/mmbtu; GSPC didn’t purchase a cargo it was seeking for Sept. 25 delivery via a separate tender
- Gail purchased an LNG cargo on a DES basis for Aug. 15-16 delivery to the Dahej terminal in India at a discount to the WIM index
- CPC seeks an LNG cargo on a DES basis for Sept. or Oct. delivery to Taiwan
- Pavilion seeks an LNG cargo on a DES basis for Aug. 28-Sept. 15 delivery to the Singapore LNG terminal
- Shell, BP and Glencore bid for Sept cargoes delivered to North Asia via the S&P Commodity Insights market on close, said traders; Shell bid at discount of $8.70/mmbtu to Sept. TTF prices; Glencore bid at 40c/mmbtu premium to Sept. JKM prices; BP bid at $1.40/mmbtu discount to Oct. JKM prices