South American demand driving up spot LNG prices

Friday, January 25, 2013

South American demand has been driving up spot LNG prices as Brazil and Argentina buy up a large portion of the Atlantic Basin spot LNG supplies creating competition with North Asia, data from Platts unit Bentek Energy showed Friday.

Buyers in North Asia competing for an Atlantic Basin spot cargo are also at a transportation disadvantage compared with buyers in South America, Bentek said, given the shorter voyage and other logistical reasons.

"A netback calculation shows that a Trinidad and Tobago sourced cargo delivered into the Joetsu City Terminal in Japan on January 18 would have likely fetched a value of around $57.7 million, with the December 7-20 JKM at an average DES price of $16.54/MMBtu," a Bentek LNG analyst said.

The same cargo would have only needed a price of about $14.97/MMBtu if it had been delivered into Brazil to give an Atlantic Basin seller the same value from sending it to North Asia, Bentek said.

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