(EnergyAsia, March 19 2015, Thursday) — Asia’s liquefied natural gas (LNG) prices will enjoy a brief rally in the summer that will be quickly cut down by the start-up of new production capacity in Australia, predicts energy consultant Wood Mackenzie.
The expected resumption of operations at some nuclear plants in Japan will also pressure Asian LNG prices to converge back to European spot prices towards year-end, according to the UK firm’s latest quarterly analysis of the industry.
Asia’s spot LNG prices will rise to around US$8.5 million per million BTU in the second and third quarters on account of demand growth outpacing supply, but will slip back to US$7 as more supply flow from new capacity starting up in Australia.
Prices are hovering around US$7, according to energy media Platts.
“For the first time since 2009, Asian LNG spot prices are trading at a discount to European spot prices,” said Massimo Di-Odoardo, Wood Mackenzie’s principal European gas analyst.
“Benign weather conditions in North East Asia and ample supply availability combined with low oil prices continues to put pressure on Asian LNG prices.” European spot prices are being supported by high seasonal demand and the cap imposed on Groningen production for the first half of 2015.
He expects spot prices both in Asia and Europe to be supported through the summer.
Yingying Zhou, Wood Mackenzie’s Asia LNG research analyst, expects the partial restart of Japan’s nuclear capacity and the commissioning of new nuclear and coal capacity in South Korea to dampen LNG demand in 2015.
This will be offset by strong demand in China and the start-up of new regasification capacity in Southeast Asia, India and the Middle East.
“Overall, we expect Asia Pacific LNG demand to be some 6 million tonnes higher in 2015 compared to last year, despite Q1 being lower,” said Ms Zhou.