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Russian Tender Award Stokes Fresh Asian Price Rally

Source: Reuters 10/27/2017, Location: Egypt

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Asian spot liquefied natural gas (LNG) prices rose this week after a tender award from a Russian export plant set a bullish tone, reversing losses from earlier in the week.

Spot prices LNG-AS for December delivery rose to $9 per million British thermal units (mmBtu), 30 cents above last week’s levels.

Russia’s Sakhalin II LNG export plant awarded a late December-loading cargo at a price above $9 per mmBtu, potentially to Gazprom, traders said.

Nigeria’s NLNG export plant sold a Nov. 5-7 loading cargo to U.S. producer Cheniere Energy, one trader said, without giving a price.

Gail India filled most of its tender seeking supplies between October and January, paying in the high $8 per mmBtu range for a December delivery and in the low $9 per mmBtu range for a January cargo, one trader said.

It was unclear if Bharat Petroleum awarded its tender for a December cargo.

Low coal inventories at Indian power stations have helped extend demand for spot LNG purchases despite relatively high spot prices which Indian buyers typically avoid paying.

Egypt’s state-run LNG buyer EGAS extended the bid submission deadline for companies in its ongoing 12-cargo purchase tender to Oct. 31, giving prospective suppliers more time to organise bids.

EGAS also lifted the upper price limit of what it could pay to the equivalent of $65 a barrel of Brent crude oil from $60 a barrel previously, traders said.

Traders speculated whether Egypt’s tender for first quarter 2018 supplies, which is lower than expected, would be followed by additional purchases through government-to-government deals, as happened after previous tender rounds.

Egypt’s surging domestic gas output is rapidly eroding LNG demand and with the country’s giant Zohr gas field set to start pumping in December it may curb appetite further.

Traders said there was ongoing demand from South Korea and Turkey, although Korea Gas Corp was likely pulling in greater volumes via long-term suppliers such as Qatar to plug shortfalls, and not via spot markets for now.

Royal Dutch Shell has extended a shutdown at its Queensland Curtis LNG export plant to Oct. 30, data on the Australia Energy Market Operator (AEMO) website showed.

Angola’s LNG export plant has launched a tender to sell a cargo loading between Oct. 31 and Nov. 2, trade sources said.

Commodities trader Gunvor and Spain’s Gas Natural Fenosa put in the lowest bids in a tender to supply Pakistan with four LNG cargoes in January, a document posted on Pakistan LNG Ltd’s website shows.

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