PIRA Energy: Korea’s Nuclear Problem Halts Spot LNG Price Decrease

PIRA Energy Group reports that Korea’s nuclear problem halted the spot LNG price decrease. In the U.S., updated fundamentals remained constructive to gas price recovery. In Europe, the risk to gas price is now greater because the market was unable to put much of a dent in the storage deficit in May.

Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:

Adding to an already booming gas demand surge in Korea this year, another two large-scale nuclear power plants have recently been taken offline for up to four months due to a continuing maintenance falsification scandal. PIRA sees the scandal driving up spot cargo demand in Asia. The nuclear problems, which actually emerged last October, will also delay the restart of two other nuclear power units.

Updated Fundamentals Remain Constructive to Gas Price Recovery

Regardless of the risks surrounding CDDs this summer, and the tough year-on-year comparisons that also lay ahead, especially in July, PIRA’s updated fundamentals support gas prices near current levels, barring fresh bullish developments. While additional gains from the Marcellus and Utica should keep prices in the Mid-Atlantic in check, and the start-up of Deep Panuke will dampen New England basis, PIRA sees other issues curbing the influence of surplus volumes in the Northeast impacting regional prices elsewhere.

Less Storage Requires More Supply

Over the last month, Norway has sharply increased the amount of gas production that will be affected by maintenance over the next 30 days. June shut-ins are now equal to August shut-ins. While estimates by pipeline operator Gassco are certainly fungible, the risk to price is now greater because the market was unable to put much of a dent in the storage deficit in May. Incremental supply has emerged from Russia and the Netherlands, but not in the type of volume necessary to prepare for next winter.

[mappress]
LNG World News Staff, June 05, 2013