Golar LNG: Spot Prices Climb in Q4 (Bermuda)

Spot LNG prices rose throughout the fourth quarter, from the high $12’s per MMbtu to around $17 per MMbtu in December and $20 per MMbtu in February due to a variety of factors, Golar LNG said in a statement on Monday.

An unprecedented drought in Brazil saw Petrobras continuing an aggressive buying strategy throughout the quarter and well into the new-year.

In Korea, several nuclear reactors were switched off due to alleged component malfunctions causing the state buyer to aggressively compete for Atlantic basin cargoes.

A cold winter in China increased its imports by up to 20% earlier this year. The outage of nuclear power in Japan combined with a relatively cold winter meant Japanese utilities were very active in the spot market.

In December, Argentine ENARSA and YPF launched a series of tenders for deliveries in 2013 for approximately 80-85 cargoes. Turkey’s demand for spot LNG also rose significantly forcing them to compete for spot cargoes.

As a consequence of the above, towards the end of the year, demand for shipping capacity increased both in the Atlantic and Pacific. Higher than expected ramp up by Woodside’s Pluto LNG plant also created some demand.

Several cargoes produced in Australia, Oman, Qatar and Brunei were lifted by short-term chartered vessels. In the Atlantic, cargo diversions out of Nigeria and reloads out of mainly European terminals (Spain, Belgium and France) also utilized short-term chartered vessels.

Estimated LNG production during 2012 did not rise to anticipated levels due to the many noted production and feed gas issues referred to above, Golar said.

During 2012, the re-export market did however exceed 3.5 MMt, which created shipping demand, as South America, North Asian and European markets imported these volumes. The long-awaited Angola LNG facility is now slated for a Q2 start-up and a higher than normal fleet-wide program of drydockings will absorb some vessels.

Rates remained resilient in the face of delays and incidents over the course of 2012 which the Board sees as testimony to the strong underlying market fundamentals LNG is still selling at attractive price against oil as measured on a burn parity basis.

This together with the environmental benefits and the flexible use of LNG as source for the power market has led to significant build up demand in for LNG purchases.

However the important factor for the shipping market in the years to come will not be the demand side but to what extent producers of LNG can bring enough product to the market to feed this built up hunger for LNG .

The strength of the LNG shipping market in the years to come will be closely linked to what kind of success the LNG producers will have in debottle necking existing facilities and also bringing their new volumes into the market in accordance with original plans, Golar said.

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LNG World News Staff, March 5, 2013