Asian spot LNG prices inch up as market eyes Australia strikes -
Monday, 18 September 2023
LONDON, Sept 17 (Reuters) - Asian spot liquefied natural gas (LNG) prices inched up last week amid supply concerns as workers at Chevron's Australia LNG projects escalated industrial action and as feedgas intake at US Freeport dropped below normal capacity.
The average LNG price for October delivery into north-east Asia rose to $13.00 per million British thermal units (mmBtu) from $12.90 in the previous week, industry sources estimated, adding that average price for November delivery was estimated at $14.00/mmBtu.
Workers at Chevron's Gorgon and Wheatstone in Australia, responsible for more than 5% of global supply, escalated a 6-day limited strikes, and until around end-September, unions can strike for up to 24 hours a day and refuse tasks such as loading tankers. However, Chevron continued exports of LNG on Friday despite the step up in strikes and a fault at the Wheatstone plant that cut production by 25%.
Freeport LNG, the second-largest US liquefied natural gas exporter, has cancelled four cargoes since its feedgas intake dropped.
"The Australian strikes and new issues at Freeport are keeping traders on their toes at the moment," said Alex Froley, LNG analyst at data intelligence firm ICIS.
"These are big facilities … the Australian plants on strike are around 5-6% of global supply, while Freeport is around one fifth of U.S. capacity. But the key point at the moment is that complete shutdowns aren't yet expected," he said.
Froley added that prices could rise further if these issues were to escalate into major shutdowns, but companies aren't looking to secure lots of alternative cargoes for now.
Samuel Good, head of LNG pricing at commodity pricing agency Argus, said the slowdown in feedgas supply at Freeport LNG suggests around four cargoes have so far been cancelled.
"At least one Freeport offtaker has been heard to have been exploring options for sub-letting spare ships because of the loss of loadings and very high rates in the spot charter market," he added.
S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in October on an ex-ship (DES) basis at $10.612/mmBtu on September 14.