LNG Bunker Snapshot: Prices surge in Rotterdam and Singapore

Rotterdam's LNG bunker price has risen amid maintenance work and lower production in Norway, while Singapore's LNG price has drawn support from hot regional weather.

PHOTO: Pavilion Energy's LNG bunker vessel Brassavola delivers a stem to a Rio Tinto-chartered bulk carrier. Pavilion Energy

Changes in weekly LNG bunker prices:

• Rotterdam up by $36/mt to $789/mt
• Singapore up by $14/mt to $863/mt

Rotterdam

Rotterdam's LNG bunker price has shot up by $36/mt in the past week, to $789/mt. The underlying Dutch TTF Natural Gas contract rolled from the September contract to the higher-priced October contract last week, which has contributed to raising the TTF benchmark.

Ongoing gas infrastructure maintenance in Norway is causing supply disruptions, Denmark’s Energi Danmark said.  

Gas flows from Norway have dropped sharply - from 350 million cbm/day in early August to just over 235 million cbm/day now. Further reductions are expected as gas infrastructure maintenance at Norway’s Troll field begins, ING’s Warren Patterson said.

Europe’s winter gas supply outlook is also challenged by uncertainty around Russian gas flows through Ukraine. The current gas transit agreement between Russia and Ukraine is set to expire at the end of the year, and there is no clear indication of whether it will be renewed or replaced with a new deal. Without an agreement, flows could be disrupted.

"The future of Russian gas transit through Ukraine is uncertain, potentially impacting European gas prices this winter," said Jeffrey Ojinere, an LNG analyst at Lagos based company Pinacrest.

Despite this, storage levels remain at 92.4% capacity - well above the usual for this time of year. That could help cushion some of the impact from potential disruptions ahead.

Singapore

Singapore's LNG bunker price has risen by $14/mt to $863/mt. This increase has been driven by a higher NYMEX Japan/Korea Marker (JKM) price.

Japan has had hotter-than-average weather for this time of the year, which is pushing up power demand and prices. Both China and Japan are seeing record LNG imports, with demand driven by unusually hot weather.

But Japan's situation may stabilise soon as Typhoon Shanshan caused a significant power outage on Japan’s Kyushu island. Kyushu relies on LNG to generate electricity and the outage has reduced the country's demand for LNG, senior analyst at ICIS Fei Xu said.

Looking ahead, LNG prices might shift into backwardation, says Eni's Etulan Adu, which is a situation in which future prices dip below spot prices. This might disincentivise buyers from purchasing as they expect prices to go down, and it will disincentivise suppliers from storing gas as it is expected to drop in value. 

By Debarati Bhattacharjee

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