Asian spot liquefied natural gas (LNG) prices held steady this week as regional demand remained muted, while a gas supply deal between Russia and China is seen curbing future LNG shipments from the top Asian importer.
The average LNG price for October delivery into Northeast Asia was at $11.30 per million British thermal units (mmBtu), slightly up from $11.15/mmBtu last week, industry sources estimated.
"Buying interest remained muted from east Asian importers, with some Japanese and Korean companies offering cargoes for fourth-quarter delivery," said Rystad Energy analyst Masanori Odaka, as current prices remain above the target procurement level for some end-users.
Chinese importers are staying on the sidelines at current spot prices as well, with most utilities only keen to buy at around $10.50/mmBtu, he added.
Meanwhile, following the first unloading of an LNG cargo from Russia's sanctioned Arctic LNG 2 project in China, Beijing and Moscow this week signed agreements to increase gas supply via the existing Power of Siberia pipeline, and to construct the Power of Siberia 2, though they have yet to agree on pricing.
China is sending a clear geopolitical signal that it is willing to receive more Russian gas, reducing LNG dependency from other sources from 2027 and influencing the profitability of other LNG producers, said Klaas Dozeman, a market analyst at Brainchild Commodity Intelligence.
Analysts and industry participants are also monitoring whether more sanctioned tankers carrying Arctic LNG 2 supply will deliver additional cargoes to China.
In Europe, SP Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for cargoes delivered in October on an ex-ship basis at $10.475/mmBtu on September 4, a $0.625/mmBtu discount to the October futures price at the Dutch TTF hub.
Argus assessed the price at $10.49/mmBtu, while Spark Commodities assessed it at $10.442/mmBtu.
"Continued (supply) growth from the US helped to offset the decline seen from Nigeria as the Bonny LNG plant went into maintenance," said Aly Blakeway, manager of Atlantic LNG at SP Global Commodity Insights.
"This also comes at a time where imports into Europe have seen slight declines as subsided heatwaves and easing fears over storage added further bearish tailwinds into the market."
The US front month arbitrage to Northeast Asia via the Cape of Good Hope narrowed significantly this week, only marginally incentivising US cargo deliveries to Europe, said Spark Commodities analyst Qasim Afghan. The arbitrage via Panama experienced similar increases and is now open to Asia.
In LNG freight, Atlantic rates fell to $28,500/day on Friday, while Pacific rates declined to $32,500/day, he added.
(Reporting by Emily Chow; Editing by Sonia Cheema)