NYC-based PIRA Energy Group said in a report it believes that Nigeria LNG force majeure will stir up spot markets. In the U.S., PIRA expects end-October usable working capacity to be up from a year ago. In Europe, the storage deficit improves but remains significant.
Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:
An extended delay in total exports from Nigeria could spell serious trouble in Asia as the summer peaking season for Japan kicks in. Nigeria LNG has issued a force majeure on exports as a port blockade over a tax dispute has halted all LNG exports since June 22. For now, Europe’s lack of urgency in using LNG to make up its storage deficit is keeping global markets well stocked, as reloads from Belgium and Spain continue. An ample regional price difference between the N.W. Europe spot price and those in Asia easily covers the cost of re-directing cargos.
Projected End-October 2013 Storage Capacity
The build-out of U.S. storage has slowed since the 2012 injection season. PIRA estimates that only 43 BCF of working gas capacity has been added since end-October 2012. PIRA expects end-October usable working capacity to be up from a year ago.
Storage Deficit Improves but Remains Significant
As we enter the lowest gas consumption period of the year, supply is not dropping as fast as demand, but supply is dropping fast enough to limit storage injections to the point where spot prices will continue to see support. The European-wide storage deficit remains large, although not as large as it was one month ago, and pockets of stability are emerging. The U.K. and Italy are trending toward normal levels, while Germany and France still have a long way to go.
[mappress] LNG World News Staff, July 3, 2013; Image: Daewoo E&C