S China power firms may buy spot LNG on reduced Australia supply

29 April 2013 04:15  [Source: ICIS news]

SINGAPORE (ICIS)--South China-based power companies may need to purchase liquefied natural gas (LNG) from the international spot market to make up for the unexpected reduction in contract supply from Australia, industry sources said over the weekend.

Some 120,000 tonnes of LNG from Australia were not shipped to China so far this year, and the reason for this is still unclear, they said.

Shenzhen Dapeng Marketing, a major trader of imported LNG into southern China, is entitled to receive an annual supply of 3.7m tonnes of LNG from Australia under a long-term deal.

Buying LNG from the spot market, however, meant higher costs for the power companies.

On 26 April, spot LNG prices were assessed at $14.35/MMBtu (€11.05/MMBtu) CFR (cost and freight) China for second-half May cargoes, and at  $14.475/MMBtu for June cargoes, according to ICIS C1 Energy.

Current spot values are more than four times higher than the Australian contract LNG price for March, which was at $3.23/MMBtu, official data showed.

Some power companies hope the government could step in to provide support by raising the on-grid electricity rates, but this is unlikely to happen, market sources said.

($1 = €0.77 / $1 = CNY6.16)

By: Ricki Wang
+65 6780 4359

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