Lagos — The average liquefied natural gas, LNG, price for April delivery into north-east Asia was estimated at $38.00 per metric million British thermal units, mmBtu, last week, down $2.50 or 6.2% from the previous week, industry sources said.
The price decline tracked European gas prices which fell due to stable Russian gas flows and LNG supply.
However, market players remain concerned over the risk of Russian supply disruption amid a tense geopolitical situation following Moscow’s invasion of Ukraine, which remains a bullish factor that could send prices higher.
“It’s all still very politically driven with regards to the Eastern situation and THE risk of (Russian gas) cut-off remains. In the meantime, supplies from Russia are healthy, LNG (flow to Europe) is increasing and the outlook on fundamentals is bearish,” a European trader said.
Another factor which would support a price rise would be Europe’s attempts to fill its gas storage during the summer gas season which runs from April through October.
“Europe’s attempt to fill out 90% of its gas storage by October is likely to be a challenging endeavor as that would likely slow LNG demand growth in Asia, suggesting elevated prices for months on end,” said Kaushal Ramesh, senior LNG analyst at Rystad Energy.
Price agency S&P Global Commodity Insights’ Japan-Korea-Marker, JKM, which is widely used as a spot benchmark in the region, jumped to a record $84.762/mmBtu as buyers scour global markets for LNG cargoes to replace Russian gas and LNG, but declined later into the week.
Industry and government sources said White House efforts to boost U.S. liquefied natural gas exports and cut Europe’s reliance on Russian gas are proceeding slowly, because of concerns about the impact on climate change.
The European commission earlier last week revealed a plan to wean its economies off Russian gas, focusing on replacing Russian gas with alternative supplies of 60 billion cubic metres, bcm, most of which would come from LNG imports.
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