Asian Gas Prices Rally on Rush by Japan to Secure Winter Supply

  • In Business
  • 2022-08-12 08:10:16Z
  • By Bloomberg

(Bloomberg) -- Japan, one of the world's top buyers of liquefied natural gas, is rushing to secure supply for winter, exacerbating a global shortage and driving prices of the super-chilled fuel higher.

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The Asian benchmark spot price has jumped this week, although is still almost 70% off the record set in early March, when Russia's invasion of Ukraine upended markets. Several Japanese utilities accelerated discussions with suppliers in the past week to purchase additional shipments for winter, according to traders with knowledge of the matter.

Supply disruptions from Russia to the US have importers worried that there won't be enough natural gas for everyone when demand peaks in the northern hemisphere winter. That's intensified competition between Asia and Europe for LNG shipments, sending spot prices in both regions to unprecedented heights for this time of year.

The two largest LNG importing companies -- Korea Gas Corp. and Japan's Jera Co. -- are both in the process of buying more cargoes for winter. That prompted smaller Japanese utilities to dive into the spot market to also secure shipments while supply is still available, traders said.

The Japanese government has been urging the nation's utilities to stock up inventories before winter amid an outlook for tight power supply, according to the traders.

The Japan-Korea Marker, the spot LNG benchmark for North Asia, surged 9% to $50.63 per million British thermal units on Thursday, the highest since July 27, according to S&P Global.

  • BP was allocated an extra LNG cargo for Oct. 7 loading from the NWS export facility in Australia, said traders

    • The so-called "upside cargo" was awarded to BP this week

  • Oman sold an LNG cargo scheduled to load in August

Buy tenders:

Sell tenders:

(Adds prices, details from last paragraph.)

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