PIRA: Mexico, South America not increasing LNG spot purchases
NYC-based PIRA Energy Group believes that lower prices and wider availability of spot supply in the Atlantic Basin should have translated into a buying bonanza for counter seasonal buyers in Mexico and South America.
With Asian buying quieter and the west-east arbitrage window closed, lower prices and wider availability of spot supply in the Atlantic Basin should have seen counter seasonal buyers in Mexico and South America up their purchases, but this pattern has not borne out, PIRA said in its report.
In the United States, following two weeks of gas-fired EG burns above 30 BCF/D, the reference week’s volume fell below that mark and is expected to remain below that threshold for next week’s report as well. Estimates for the week ending July 10 promise to close out the first half of July with a sizable below-normal CDD accumulation. Any continuation of the cool pattern would pose further downside risk to the latest full month estimate and increase pressure on August gas burns, the last month of the peak cooling season.
As promised, restrictions on Russian gas flows appear to be having an impact on Ukrainian gas injections, but not necessarily on transit flows through the country. Additional Russian pipeline volumes are making their way through Ukraine itself and through the Nord Stream pipeline into Germany via the Baltic Sea. However, the increase in flows through the Nord Stream-connected Opal pipeline in Germany would make sense if more gas was flowing back into Ukraine via the Czech Rep. at Lanzhot and Slovakia at the Budince connection point. But, this flow is not happening at the moment and is leaving Ukrainian storage injection levels at much lower rates.
In India, the price of cheaper domestic gas will be averaged or pooled with cost of expensive imported LNG to create a uniform rate for fertilizer plants that consume about 42.25-mmcm/d for the manufacture with 15.75-mmcm/d coming from the imported LNG. The pooling is set to be effective from August 1.