LNG Market Update

Date: 20th July 2014

LNG Market update

Volume: IG/MKT/24

Aug/Sep/Oct 2014 LNG Market

oDemand/Supply situation –

Japanese utilities are still having demand for September, Chinese companies may also buy some cargos in September. Taiwan is also looking for additional cargos in September.

Indian demand looks to be completely filled for August, with no additional demand for September so far. One Indian buyer has bought a cargo from a portfolio supplier for September.

KOGAS oversupply situation continues hence they will not be looking for any additional cargos.

Argentina & Turkey also buying spot cargos for September & October.

Some August offers have already got rolled over to September, sellers are expecting the market to recover slightly starting mid-late October.

LNG price for Aug/Sep/Early-Oct looks flattish however starting late October the LNG demand and the price may pick up. As of now there is not much indications of the price trend as buyers remain in wait and watch mode.

Demand from various markets

oJapan-Korea Market – US$ 11. 0/mmbtu around for late Aug/Sep

Japan – Demand for Sep. remains weak with prices bids from buyers below US$ 11 levels.

Korea – No additional demand for September from KOGAS, swapped their Aug cargo with CPC to receive the swapped cargos possibly in Nov.

Thailand – PTT tender for August awarded to Chevron, the cargo will be supplied from Nigeria. PTT may look to buy additional cargos in September owing to the lower prices.

Taiwan – Looking for 1 LNG cargo in September

oEuropean market

Turkey has bought around 9 LNG cargos from Qatar to be supplied from end of 2014 going in 2015.

oLatin American Market – US$ 10. 5-11. 0/mmbtu around

Argentina – YPF, Argentina bought a spot cargo for October from BP at around US$ 12/mmbtu

oIndian Market – Below US$ 10. Wichtig ist hier insbesondere die schaffung und förderung diese demokratischer strukturen… 5 /mmbtu west coast India

Demand – Demand for September remains low with no additional demand for August and limited additional demand for September. One Indian buyer has bought a September cargo at low US$ 10 levels on DES basis to west coast of India.

Terminal – Dahej terminal is operating almost at full capacity with no additional capacity for handling more spot cargos. Dabhol terminal stopped due to rainy reason in India & Kochi terminal operating at very low levels due to evacuation pipeline issues.

o Demand from buyers:

Demand/Buyer

Quantity

Delivery/Loading Month

Remarks

Japan – Utilities

4-5 Cargos

Sep’14

China

1-2 Cargos

Sep’14

Taiwan, CPC

1 Cargo

Sep’14

Thailand, PTT

1 Cargo

Sep’14

Additional

Argentina

1-2 Cargos

Oct’14

Additional

Supply update

oAsian / Middle East Supplies

Indonesia – Bontang LNG may offer 1-2 cargos in September.

Malaysia – Bintulu LNG may offer 1-2 cargos in September.

ADGAS has heard to have offered a prompt cargo for early August delivery.

oAustralian Supply

NWS may offer 1-2 cargos for September/October, buyers in Asia await this tender.

PNG LNG may offer 4-5 cargos for September spot market. However PNG LNG will start long term supplies to Japan & Taiwan in October, this may result in no additional spot cargo availability starting October’14.

oEuropean Reloads – Northwest Europe – US$ 8. 0, Southwest Europe – US$ 8. 5 mmbtu

Spanish reloads – One FOB cargo on offer at around US$ 11/mmbtu.

Netherland – One FOB cargo on offer at around US$ 11/mmbtu.

Sakhalin – September & October cargos on offer, likely to be picked up by Japanese utilities.

o Supply offered:

Source/Seller

Quantity

Delivery/Loading

Remarks

Month

Indonesia – Bontang

1-2 Cargos

Sep’14

Malaysia – Bintulu LNG

1-2 Cargos

Sep’14

ADGAS

1 Cargo

Aug’14

Tender Announced

NWS, Australia

1-2 Cargos

Sep’14

Tender Expected

PNG LNG

4-5 Cargos

Sep’14

Sakhalin

1-2 Cargos

Sep/Oct’14

European Reload

2 Cargos

Sep’14

Nigeria

1 Cargo

Sep’14

o Deals for July/Aug/Sep delivery cargos into Asia:

Market/Buyer

Source/Seller

Quantity

Price

Delivery Month

(US$/mmbtu) -DES

India

Portfolio supplier

1 Cargo

US$ 10. 3/mmbtu

Sep’14

around

YPF, Argentina

BP

1 Cargo

US$ 12/mmbtu

Oct’14

PTT, Thailand

Chevron

1 Cargo

US$ 10. 4/mmbtu

Aug’14

Turkey

Qatar

9 Cargos

Unknown

Q4 2014- Q1

2015

November/December 2014 LNG Market preview:

i. Offers at around US$15/mmbtu for November/December cargos for the Far East market. Some sellers also showing Jan’15 cargos at more than US$ 16 levels.

ii. Buyers still await the weak market to continue into the winter months hence are not in a hurry to sign on cargos for November/December. However some Japanese utilities are in the market now and are in the process of contracting additional volumes for winter months.

iii. Winter demand from Japan, Korea & China will resurface in the market soon taking the market to higher levels. Buyers in Far East are willing to pay US$14 levels for November cargos which gives an indication of firm winter demand.

iv. Increase in Europe demand will result in higher gas/LNG prices in the European market, reducing the arbitrage and hence will reduce the reloading cargos from Europe. NBP marker is forecasted to go back to US$ 10-11 levels in Dec/Jan’15 months.

v. Supplies from PNG LNG will not be available to the spot market since all the volumes will be sent to long term LNG buyers from October onwards.

vi. Nuclear situation in Japan remains almost unchanged and possible restart on 2 units of Sendai plant will not impact the LNG demand at all as it accounts for only 1 cargo/month LNG demand in equivalent terms. ( Our detailed analysis

on Nuclear situation in Korea & Japan and its impact on LNG demand will be available soon on our website )

IndiaGas price forecast for June’14 – Jan’15 for LNG prices in Asia &

Europe

IndiaGas LNG price Forecast

18. 00

16. 00

14. 00



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US$/mmbtu

12. 00

10. 00

8. 00

6. 00

4. 00

2. 00

0. 00

NBP

Far East Asia Spot – Present Case

Asia Spot – IndiaGas Forecast

Europe/Asia Arbitrage – Netback

Note: NBP & Asia prices are as per latest market information, bids/offers (Not based on forward months prices of major markers)

Disclaimer: The deal updates and market information is as obtained from various traders & market sources, IndiaGas does not take any responsibility for the authenticity of the information.

 

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