US/UK gas price differentials collapse as LNG cargoes head west

摘要

This month the UK will import gas from a new source -Australia. The scheduled cargo, the 138,000 cm LNG Pioneer is carrying LNG from the North West Shelf project bought by Centrica and is due to arrive at the UK's Isle of Grain terminal before the end of the month. This will be the first time that an Australian LNG cargo has been delivered to the UK, and the first shipment from Australia to an Atlantic Basin market since 2006. The fact that no better outlet could be found for this cargo in Asian markets is further evidence of the switch in LNG trading patterns which has been taking place since the end of last year.This switch, precipitated by sharply increasing production coinciding with shrinking short term LNG demand in core markets, is almost the opposite of the market conditions which existed for most of 2008. One of the first consequences of the current market seems to have been the collapse of the US/UK gas price differential and the next phase is likely to be a build-up in deliveries to US terminals. In this article LNG Business Review summarises the current market developments and anticipates how prices and cargo destinations may evolve over the next few months.