NW Shelf sees pick-up in Asian spot LNG demand

By Fayen Wong

PERTH (Reuters) - The North West Shelf venture, Australia's largest liquefied natural gas (LNG) producer, sees signs of demand picking up in China and expects Asian demand for spot LNG shipments to recover slightly this year.

Peter Cleary, president of the North West Shelf LNG marketing arm, said he expected China and India to dominate the LNG spot market in the second half of the year, helping to compensate for the drop in demand elsewhere in Asia amid the economic crisis.

"The Indian market is growing in importance to the North West Shelf," Cleary told Reuters in a telephone interview on Friday. "We continue to engage with Indian buyers and we expect a few more of our cargoes to end up in India later this year."

India's LNG imports have surged in recent months as new regasification facilities come onstream and as attractive prices set off a flurry of spot buying.

While Chinese buyers have stayed on the sidelines after having bought two spot cargoes in April, Cleary said there were signs that Chinese demand was recovering.

"In general keeping with Chinese economy, we think there's a course for optimism in how that market will grow. We're starting to see more positive signs and the indications are that demand (for LNG) is picking up again in southern China," Cleary said.

Spot trade of LNG has virtually dried up in Asia since late last year amid a drop in demand from Asian utilities, a stark turnaround from when Asian buyers paid high premiums over buyers in Europe and the United States.

A surge in new capacity, led by Indonesia, Russia, Qatar and Yemen, has also weighed on prices, prompting them to hover between $4-$5.50 per million British thermal units (mmBtu) most of this year, versus a peak of over $20/mmBtu last summer.