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Japanese balk at spot-LNG: too expensive! - admin - 07-05-2012
Japan Reduces Spot LNG Purchases as Prices Soar to Near a Record
By Dinakar Sethuraman - Jul 5, 2012 1:46 AM GMT+0200
Japan cut purchases of spot liquefied-natural-gas cargoes by 27 percent in May from a month earlier as prices soared to near a record amid the closing of domestic nuclear power plants.
Supplies for immediate and short-term delivery from the Atlantic Ocean area dropped to 847,624 metric tons in May from 1.16 million tons in April, according to calculations by Bloomberg based on data from the Ministry of Finance. Prices of spot LNG climbed to about $920 a ton, or $18.93 per million British thermal units, 16 percent higher than last year’s average. The fuel reached a record $25 in 2008.
Japan shut all 50 of its nuclear reactors for safety tests after last year’s earthquake and tsunami, halting atomic power generation for the first time in more than four decades. The country is restarting two units this month. Total LNG purchases in May rose 16.8 percent from a year earlier.
“Spot cargoes will start to moderate in the second half as Japan re-starts some of its nuclear facilities,” said Neil Beveridge, an analyst for Sanford C. Bernstein & Co., in Hong Kong in an e-mail on June 29.
Prices of LNG delivered into Japan including spot and term supplies declined by 0.6 percent from April to 70,916 yen ($889) a ton in May, equivalent to about to $18.30 per million Btu, as oil prices declined, according to the data.
The Japan Crude Cocktail, a basket of prices for oil imported into the country used to calculate LNG prices, fell to $124.56 a barrel in May from $126.96 in April, according to data compiled by Bloomberg. U.S. gas futures was at $2.909 per million Btu today and U.K. supplies were at $8.85 yesterday.
Nigerian Supplies
Spot and short-term supplies of LNG rose by about half from a year earlier while average costs at 73,424 yen a ton increased 36 percent, according to calculations based on the data.
Supplies from Nigeria fell 31 percent in May to 291,855 tons from a month earlier, and shipments from Equatorial Guinea declined by half to 129,490 tons, according to customs data.
Japan may reduce purchases of spot cargoes in July, according to initial estimates from ship-tracking data. The country may bring in at least six vessels carrying fuel from the Atlantic Ocean region and Yemen, down from nine a year earlier, according to the data from IHS Inc. (IHS) and the Ministry of Finance. Short-term imports reached a record 1.18 million tons in February.
Utilities increased thermal power output by 34 percent in May to compensate for the drop in nuclear generation, according to data released June 13 by the Federation of Electric Power Companies of Japan.
RE: Japanese balk at spot-LNG: too expensive! - Tree - 07-06-2012
The LNG market is Japan. Jobama needs to cap energy prices and specifically LNG. By not propping high Spot prices, firing nuke plants against public pressure not to, further efforts to disjoint Oil Parity LNG pricing, taking equity stakes in LNG projects world-wide and consorting with KOGAS as to not bid up IOC's resources prove JP is dead serious of getting handle on escalating energy costs.
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LNG prices may peak with Japan starting nuclear plants
Posted on July 6, 2012 at 7:30 am by Bloomberg
Japan’s plan to start nuclear power stations for the first time since last year’s Fukushima disaster is stoking speculation that prices for liquefied natural gas have peaked after reaching a three-year high.
Kansai Electric Power Co. was set to generate electricity at 7 a.m. Tokyo time Friday from its Ohi plant, ending a two- month period in which all 50 of the country’s reactors were offline. Spot LNG, for delivery in four to eight weeks, to northeast Asia dropped 55 cents to $15.25 a million British thermal units this week, according to World Gas Intelligence. They won’t rebound before October, Bank of America Corp. said.
Falling prices will help Japan, the world’s biggest importer of the chilled fuel, cut soaring energy import costs that last year pushed the country into its first trade deficit since 1980, while denting export revenue in countries such as Malaysia, the nation’s biggest supplier. Japan paid a record $7 billion for LNG in January, twice as much as a year earlier, as it struggled to compensate for the nuclear shutdowns.
“Market perception of LNG tightness could ease and this should further erode LNG spot pricing in Asia,” said Thierry Bros, an analyst at Societe Generale SA in Paris. “We could see LNG spot pricing at $15 a million Btu at the end of the fourth quarter if more nuclear plants are restarting in Japan.”
Prices for LNG cargoes to northeast Asia in the next four to eight weeks declined $1.20 to $15.80 per million Btu through June 25, the biggest weekly drop since New York-based World Gas Intelligence started its assessment in June 2010. They reached a three-year high last month of $18.40. Natural-gas futures for August delivery rose as much as 3 cents, or 1 percent, to $2.929 per million Btu in electronic trading today on the New York Mercantile exchange.
Japan bought spot cargoes from Brazil and Spain as the country’s intake of the fuel soared to near a record in April, Ministry of Finance data show. Purchases of supplies for immediate and short-term delivery from the Atlantic Ocean area and Yemen surged to about 1.16 million tons, or at least 19 cargoes, compared with two shipments in the same period a year earlier, according to the data.
The nation gets most of its fuel under long-term supplies pegged to the cost of the Japan crude cocktail. Brent oil fell 20 percent last quarter. That decline means buyers are encouraged to take more gas under their long-term contracts and fewer cargoes on the spot market, according to Tony Regan, a consultant at Tri-Zen International Ltd. in Singapore.
“Important to overall prices, not just spot prices, is the lower price for oil,” Zach Allen, president of PanEurasian Enterprises Ltd., a Raleigh, North Carolina-based tracker of LNG shipments, said yesterday in an e-mail. “Contract prices will decline by $2 or $3 a million Btu as a result of cheaper oil.”
Increased output from LNG production plants should also boost the availability of spot cargoes, damping prices. At least 86 million tons of liquefaction capacity was lost through maintenance for periods of one to seven weeks during the first six months of this year in countries including Qatar, Oman, Trinidad & Tobago, Yemen, Nigeria and Equatorial Guinea, according to data compiled by Bloomberg.
Qatar, the world’s biggest LNG producer, started three units totaling 9.6 million tons of yearly output in May at its QatarGas 1 plant following planned work. Other facilities known to supply the spot market including Nigeria LNG Ltd.’s Bonny Island, Woodside Petroleum Ltd.’s North West Shelf facility in Australia and Atlantic LNG Co.’s Trinidad plant returned from scheduled and unscheduled work, the data show.
Total SA’s Yemen LNG site, struck by a series of pipeline explosions this year that halted exports, resumed normal operations on May 23, according to a company statement. Yemen exports LNG to South Korea and other destinations.
Chevron Corp.’s 5.2 million ton-a-year Angola LNG project may start this month, Kurt Glaubitz, a San Ramon, California- based spokesman for the company, said by phone on June 22. It was due to start last month with as many as 70 uncontracted cargoes a year. Laurentino Silva, an Angola LNG spokesman in the capital Luanda, didn’t return phone calls and e-mails seeking comment.
“Prices of spot LNG will soften from current levels as new supplies from Angola are coming to the market,” Regan said. “Yemen LNG is back in operation and Angola will sell all its cargoes in the spot market.”
ConocoPhillips resumed LNG shipments from the only export plant in the U.S. at Nikiski, Alaska, after closing the 1960s- built site last year. It shipped two cargoes to Japan since May, according to ship-tracking data compiled by Bloomberg.
Woodside may sell spot LNG from its newly completed 4.2 million-ton Pluto plant in Western Australia because of higher- than-expected production, the company said in May. It operated at 95 percent capacity in the last week of May compared with an expectation of 20 percent, Chief Executive Officer Peter Coleman said at the time.
Nigeria offered two spot shipments last month and is seeking to sell four in July, people with knowledge of the matter said. BP Plc’s Tangguh plant in Indonesia may sell as many as eight spare cargoes of LNG from May. National Gas Co. of Trinidad offered a cargo for loading on Aug. 17. Three spot tankers from North West Shelf were awarded this month to BP Plc, OAO Gazprom and Woodside, WGI said, citing unidentified traders.
“We do not expect LNG prices to see further upside from here until the coming winter,” Sabine Schels, a commodity strategist at Bank of America said in a report dated June 19. “In the coming years we continue to believe that global LNG markets will remain tight. In our view, LNG demand will grow strongly while supply growth will slow.”