October 17, 2007 / 6:44 PM / 12 years ago

Strong Asia demand again slows U.S. LNG imports

NEW YORK, Oct 17 (Reuters) - Estimates of liquefied natural gas imports to the United States this month continued to slip as strong demand from the Far East and more buying from Europe cornered spot supplies, according to a Houston-based consulting firm.

“The flow of LNG into the U.S. has slowed to a trickle as the Asian market continues to absorb uncommitted volumes from Atlantic basin sources such as Trinidad, Egypt, Algeria, Equatorial Guinea and Nigeria,” Waterborne Energy said in its latest report.

Waterborne Energy, a consulting firm that monitors the global flow of liquefied gases, estimates that U.S. LNG imports in October will total about 41 billion cubic feet, down more than 15 percent from an estimate of 49 bcf two weeks ago.

The report said favorable economics to some European countries had also resulted in the diversion of some spot cargoes from Trinidad and Egypt, with winter demand from countries like Britain, France and Spain not yet peaked.

Waterborne also expects U.S. LNG imports to slip further in November as winter demand in Europe picks up. Preliminary estimates are down to about 35 bcf.

The report noted that landed gas prices in Japan for December were still running in the $12 per mmBtu area, while European deliveries were fetching about $9, as both regions are offering more profit potential than the United States where prices are currently hovering around $7.

The incremental cost to ship LNG from Trinidad to Japan rather than to the United States is only about $2, while cargoes to Britain are only 30-40 cents more expensive.

Waterborne said that in the recent past almost all Trinidad LNG supply was earmarked for the U.S. market, but with growing global demand for LNG and more short-term contracts, Trinidad has become a bigger part of the Asian and European supply chain, primarily during winter when bidding picks up.

Demand from Asian countries typically picks up at this time of year due to stockpiling for winter, but the shutdown in July of Japan’s largest nuclear plant has added to the increase.

Both Europe and Asia are more dependent on LNG to meet heating and cooling demand and usually pay up for added supplies, while the United States, one of the world’s largest natural gas producers, can fall back on existing domestic reserves.

With U.S. gas inventories still hovering near record highs and likely to hit an all-time high near 3.5 trillion cubic feet by November, industry sources said there was even less need for extra supplies in the United States right now.

Shipments of LNG to the United States set a record for the first half of the year, totaling some 464 bcf or 2.56 bcf per day, because of high U.S. gas prices early in the year.

U.S. LNG imports in 2007 are likely to hit a record between 800 bcf and 850 bcf, or nearly 2.3 bcf per day, up about 44 percent from last year’s total of 584 bcf, or 1.6 bcf per day.

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