Asia gas prices jump after Russia pipeline maintenance sends Europe prices to new high
(Bloomberg) -- Asian liquefied natural gas (LNG) prices extended gains as concern mounts that Russia’s announcement of maintenance on a key pipeline to Europe will further tighten global supplies.
Producers offered LNG spot cargoes for winter above US$60 per million British thermal units on Monday (Aug 22), traders said. The Japan-Korea Marker spot benchmark slipped 1.3 per cent to US$55.277 per million Btu on Friday before Gazprom PJSC’s announcement, they said, citing data from S&P Global.
Gazprom said Friday that it would stop the key Nord Stream pipeline for 3 days of maintenance on Aug 31, helping push Europe’s benchmark price to a record. LNG traders in Asia have expressed concern that the link won’t return to service as planned, which would further tighten global markets after Russia progressively cut deliveries to Europe, its biggest customer.
Gazprom said Friday that shipments through the link under the Baltic Sea to Germany would be restored to current levels, equal to about 20 per cent of capacity, “upon completion of the work and the absence of technical malfunctions”.
Asian spot LNG prices gained for 5 straight weeks and are trading at triple last year’s level. European gas futures surged on Monday on the Russia supply fears.
Utilities in Europe and Asia are in direct competition for LNG shipments from suppliers including the US, Qatar and Nigeria, and traders are getting locked in bidding wars to attract cargoes. Japan and South Korea are currently looking to procure more spot LNG for winter, which has helped push prices to the highest level for this time of year.
Meanwhile, China may struggle to meet peak power demand following hydropower disruptions in the Sichuan region, Bloomberg Intelligence (BI) said Monday. BI expects both LNG and coal prices to continue rising in the near term. BLOOMBERG
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