East Asian LNG Prices Edge Higher On Heat, Geopolitical Risk -- Rystad Energy
KUALA LUMPUR, Aug 5 (Bernama) -- The East Asian liquefied natural gas (LNG) price for October delivery edged up 0.4 per cent week-on-week to US$20.4 per million British thermal units (MMBtu) on Aug 3, as geopolitical risk and extreme heat continued to support spot demand, according to Rystad Energy.
In its Gas and LNG Market Update report, Rystad Energy noted that buying interest has expanded even though prices remain close to the US$20 per MMBtu mark.
Bangladesh is looking to acquire three cargoes for August, following the return of the Excellence LNG floating storage and regasification unit (FSRU) after it was shut down due to a fire in mid-July. Additionally, India, Thailand, and Taiwan (China) are also active in the market.
Rystad Energy, which is an independent energy research and business intelligence company headquartered in Oslo, Norway, said Japan and South Korea face a 60 to 70 per cent probability of above-average temperatures in August, raising the prospect of faster inventory drawdowns and additional near-term procurement.
In Japan, the restart of Chugoku Electric’s 820-megawatt Shimane 2 nuclear reactor has been delayed from Aug 6 to Aug 19, with the extended outage should increase reliance on gas-fired generation during the heatwave and could add to utilities’ LNG requirements, said Rystad Energy.
Meanwhile, the report said in southern China, heavy rainfall following a typhoon in Guangdong province has lowered temperatures and boosted hydropower output, which should reduce cooling demand and limit gas-fired generation, tempering the broader regional tightening.
Rystad Energy analyst for Gas and LNG Research, Antonia Syn, said gas markets are being pulled in two directions at the moment, balancing weather-driven demand against escalating geopolitical risks.
“While President Donald Trump has shelved planned strikes on Iran in favour of renewed diplomatic efforts, last week’s attack on LNG carrier Gas Log Shanghai and a drone strike on Egypt’s Damietta LNG export terminal demonstrate how quickly supply risks can materialise.
“With Iran denying that talks with the US are underway, markets are unlikely to gain much confidence, leaving sentiment highly sensitive to further geopolitical developments,” she said.
According to the report, the disruption in Egypt has reduced the country’s direct LNG import nameplate capacity to around 1.4 million tonnes per month, below its July LNG imports of nearly 1.6 million tonnes, capping its regasification capacity and flexibility at a time when LNG imports are particularly important for meeting summer gas demand.
In the United States, Henry Hub prices remained broadly flat over the past week, edging up 0.3 per cent to US$2.77 per MMBtu (on Aug 3). This was attributed to hotter weather and rising power-sector demand offsetting strong supply and weaker LNG feedgas consumption.
-- BERNAMA