A few months ago, natural-gas traders in Asia were excitedly recalling the boom days of 2008. Back then, cargoes of liquefied natural gas (LNG) fleetingly sold for US$20/million British thermal units (mBtu); this summer, new records beckoned. The renewed bullishness owed much to spiking Asian demand—especially in Japan, where utilities coped with reactor shutdowns after the Fukushima nuclear accident partly by importing shiploads more gas. Good news for those planning and building a swathe of LNG plants in Australia, North America and elsewhere, whose schemes depend on robust Asian demand for gas (see articles on LNG prospects in the US and Canada). Then, prices plummeted.
The spot price of LNG in north-east Asia fell from heights of US$18/mBtu and more in June to around US$13.5 last week, reports say. Just as Japan inflated prices, so it has helped puncture them. Japanese firms have bought new gas on contract and quit the spot market. Two of Japan’s 54 reactors are running again, raising the possibility that more will return and the need for gas will diminish. Neither is it just about Japan, or demand: resurgent supplies from Qatari LNG plants following maintenance work are also dampening prices.
A further slide in Asian LNG prices looks unlikely. New production coming from Angola, Australia and Yemen this year and next will help keep average north-east Asian LNG prices simmering at roughly US$14-15/mBtu or so, well below the average of almost US$17/mBtu between April and June. But this is still well above the US$3.2/mBtu that North American gas costs now. Most importantly, the long-term needs of China and India will be vast. Still plenty of encouragement, then, for aspiring LNG exporters to pursue their Asian dreams.
