LNG Bunker Snapshot: Prices up on supply risks and winter demand

LNG bunker prices in Rotterdam and Singapore have risen in the past week, driven by supply concerns linked to geopolitical tensions and higher seasonal demand in Asia.

PHOTO: Peninsula's bunker supply vessel Levante LNG delivering LNG to Silver Nova in Gibraltar. Peninsula

Changes in weekly LNG bunker prices:

• Rotterdam up by $4/mt to $853/mt
• Singapore up by $37/mt to $889/mt

Rotterdam

Rotterdam's LNG bunker price has gained by $4/mt to $853/mt in the past week. The upward trend reflects a corresponding increase in the underlying Dutch TTF Natural Gas contract.

The price hike reflects growing concerns over gas supply stability in Europe, primarily due to the escalating Russia-Ukraine conflict, ING’s Warren Patterson said.

Last Thursday, Ukraine accused Russia of striking Dnipro with an intercontinental missile, raising concerns about future Russian gas flows to Europe via Ukraine. The current Russia-Ukraine gas transit agreement is set to expire by the end of this year, and Ukraine has reiterated it will not negotiate an extension with Russia.

Russian state-owned energy firm Gazprom has stopped gas deliveries to Austria’s OMV, increasing fears of further disruptions via Ukraine.

Europe’s gas storage levels have fallen below 90%, dipping below the five-year average for this time of year. Lower storage levels mean there’s less buffer to meet winter demand, which naturally pushes prices higher, Rystad Energy said.

On top of that, Norway’s Dvalin and Heidrun gas fields will undergo maintenance from 26 November to 3 December, temporarily reducing supply to Europe.

Singapore

Singapore's LNG bunker price has risen by $37/mt to $889/mt in the past week.

The rise here is partly due to supply-side challenges. Brunei LNG, a major producer in the region with an annual capacity of 7.2 million mt, reported production issues last week, Rystad Energy said.

At the same time, colder temperatures in Japan are increasing gas demand for heating and electricity generation. As one of the largest LNG importers globally, Japan’s rising demand impacts regional prices, including in Singapore.

Japan is also offsetting some LNG demand with nuclear power. Tohoku Electric restarted its Onagawa nuclear plant, cutting its LNG need by about 100,000 mt/month for power generation. Another nuclear unit, Kansai Electric’s Mihama plant restarted on 21 November after being offline since October.

While these restarts help ease LNG cargo demand slightly, they haven’t been enough to counterbalance the overall surge in seasonal consumption, Rystad Energy said.

By Debarati Bhattacharjee

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