Asian spot LNG prices surged this week after a technical fault at Russia’s Sakhalin-2 production plant was expected to reduce exports over the coming weeks. Sakhalin-2, Russia’s sole LNG production plant, expects maintenance works related to a Jan. 26 fault at its gas compressor to last until March. Traders said the fault impacted one train and would reduce exports by between five to seven cargoes per month. LNG prices for March delivery in Asia rose sharply to $5.75 per million British thermal units (mmBtu), from $4.90 per mmBtu the previous week, in the wake of the news, informs «Pacific Russia».
“Sakhalin has given some support to the market and oil prices have recovered a bit,” said a trader, adding that at least 10 cargoes had been cancelled from the project. Traders said there remained limited end-user demand, however, with plenty of surplus supply to fill any gaps left by Sakhalin.
Prices were lower for second half of March and April by which point Sakhalin-2 is expected to be fully operational again. “The Japanese don’t need cargoes, I think the price moves are more psychologically led,” a second trader said.
European oil company Total has agreed to supply 500,000 tonnes a year of LNG for a decade to China’s privately-run ENN Group, the latest in a string of deals by Chinese firms as the market opens up to independent buyers.
“There is scope for private entrants in the LNG market in China, primarily to engage in truck-based offtake of LNG,” a trader said, adding that this is a “somewhat limited” market.
“It’s not as big as injecting into a pipeline network and distributing into power plants.”
Elsewhere in Asia, traders said Taiwan’s CPC had shortlisted suppliers including Chevron, BG, Shell, Petronas, Engie, Gazprom, and BP for its five-year 60-cargo tender, while India’s Gujarat State Petroleum Corp (GSPC) cancelled a tender to purchase one LNG cargo.
Chevron Corp is sweetening its sales pitch to attract new buyers to the under-booked $54 billion Gorgon LNG export plant off northwest Australia, hit by high costs as fuel prices and demand plunge.
In the Middle East, state-owned Abu Dhabi National Oil Co. (ADNOC) plans to start a new LNG floating import terminal (FSRU) in the second half of this year, three LNG industry sources said.