"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".

- Papua New Guinea National Goals and Directive Principles

Sunday, 3 August 2014

Global LNG prices slip, Australia and India tender, Glencore bets on rebound

Reuters Jul 29, 2014, 12.19AM IST MILAN: Asian spot liquefied natural gas (LNG) prices edged lower last week as buyers low-balled sellers amid ample supply from Papua New Guinea and Australia, while bets of a winter price pickup spurred some into floating storage plays. Spot LNG prices for September delivery slipped slightly to $10.50 per million British thermal units (mmBtu) last week, compared with $10.60 per mmBtu on the week ended July 18. "I think buyers are bidding around $10 for Sept delivery, perhaps up to $11 for October. So there may still be further downside, or we could have reached the floor," one trader said. As demand stayed thin, India's Gail last week launched a tender to buy up to eight LNG cargoes from Jan-Dec 2015, mainly unloading at its western Dabhol terminal. Given the year-ahead delivery dates, India's demand left spot markets unfazed. However, a three-cargo sell tender by Australia's North West Shelf for September and November loading added to supply-led bearish sentiment. A nose-dive in prices began in late February, accelerated through spring and early summer, and now appears to be bottoming out after notching up a 50 per cent drop. The lows have spurred hopes that the traditional pickup in Asia's winter LNG demand will trigger a substantial price rebound, even if it falls short of last winter levels when spot rates exceeded $20 per mmBtu. As a result, some traders have decided to park LNG on tankers and wait out the slump until prices recover later in winter, riding the fortunes of the seasonal price spread. Trading house Glencore is among those to have bet on a rebounding winter market as parts of multi-month storage play. Traders say it has leased an LNG tanker for the purpose of storing LNG purchased at cut-rate prices, awaiting a price surge once cold weather eats through high Asian inventories. A major European utility with an LNG trading desk has made the leap as well, traders said. Behind recent price drop's is the early startup of ExxonMobil's Papua New Guinea LNG export project, whose long-term supply commitments only kick-in from October, and which took advantage of a seamless commissioning process by pumping out spot cargoes. Those should begin to thin from October as long-term customers exercise offtake rights, though it is not clear if they will need it all. A mild winter that left Asian buyers sitting on full stockpiles, South Korean Kogas' last-minute scramble to deflect unwanted cargoes, and a spree of sell tenders from Indonesia to Qatar and Australia has made this a buyer's summer.

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