Sea change: LNG tankers divert to China as winter gas shortage bites

Shizuoka Gas

15/12/2017 04:19

* China's LNG demand soars as households switch to gas for 
heating 
    * Japan re-exports LNG to China in unusual move 
    * Tankers from the Americas divert to China 
    * North Asia braces for frigid winter as La Nina starts 
    * Supply crunch pushes up LNG prices, tanker rates 
 
    By Henning Gloystein and Keith Wallis 
    SINGAPORE, Dec 15 (Reuters) - Liquefied natural gas (LNG) is 
being re-exported to China from Japan and tankers are being 
diverted from as far away as Brazil, with traders rushing to 
find cargoes in the face of a supply crunch in the world's No.2 
economy as winter bites. 
    Following an unprecedented drive to switch millions of 
households to natural gas from coal for heating, China's imports 
of LNG have surged as utilities struggle to meet soaring demand 
as winter gets off to a colder start than usual.  urn:newsml:reuters.com:*:nL3N1O83EN 
    "We expect to see many more LNG cargo diversions to China 
over the winter period," said Saul Kavonic, an analyst at energy 
consultancy Wood Mackenzie in Singapore. 
    "Given China's ... limited gas storage, it will be 
particularly reliant on spot LNG purchases to meet demand." 
    Chinese imports now include cargoes from Japan, itself by 
far the world's biggest consumer of LNG, and which is also 
entering winter. 
    The 150,000 cubic metre (cm) Neo Energy left Japan's Shimizu 
terminal on Dec. 1 and delivered LNG this week to the floating 
storage and regasification unit (FSRU) Cape Ann, which is 
sitting outside the port of Tianjin in eastern China, shipping 
data in Thomson Reuters Eikon showed.  urn:newsml:reuters.com:*:nL3N1O623K 
    A spokeswoman for Japan's Shizuoka Gas  9543.T  said the 
company was "involved in re-export business on a day-to-day 
basis".  urn:newsml:reuters.com:*:nL4N1FS2ZV 
    This Chinese demand has pushed up spot LNG prices  LNG-AS  
by more than 80 percent from their 2017 lows to above $10 per 
million British thermal units (mmBtu), a January 2015 high. 
    That puts spot prices significantly above LNG prices linked 
to the price of Brent crude oil, which are trading around $8 per 
mmBtu. 
    "If you usually import under long-term deals linked to oil 
markets and have available cargoes, this is the time you'd want 
to sell," said an LNG trader, speaking on condition of anonymity 
as he was not allowed to talk about commercial deals. 
    The urgent need for spot cargoes has also boosted rates for 
LNG tankers. 
    The daily rate for a 160,000 cm LNG tanker has shot up to 
$80,000 this month from a 2017 low of $30,000 in April, 
according to data from ship broker Clarkson and Fearnley. 
    This has led to a jump in share prices of listed LNG tanker 
owners like Gaslog  GLOG.N  and Teekay LNG Partners  TGP.N . 
     
    ACROSS THE PACIFIC     
    Thanks to much lower prices in the America's  0#NG: , LNG 
cargoes are also coming from across the Pacific. 
    The 147,000 cm Esshu Maru tanker was initially scheduled to 
deliver U.S. LNG from Cheniere Energy's  LNG.A  Sabine Pass to 
Pecem in Brazil on Dec. 22, but it was diverted to the Pacific, 
passing the Panama Canal this week, shipping data showed. 
    Another LNG tanker, the 148,000 cm Gaslog Santiago, had been 
making supply runs in the Americas in the past month, but is 
about to enter the Panama Canal and then the Pacific Basin for 
the first time in at least half a year. 
    Its destination in the Pacific was not immediately clear. 
    Compounding China's gas shortage is the La Nina weather 
pattern, which triggers cold winters in Asia's northern 
hemisphere.  urn:newsml:reuters.com:*:nL3N1O51ZH 
    Weather data in Thomson Reuters Eikon shows average daily 
temperatures in Beijing of minus 6 degrees Celsius this week, 
around 2 degrees below the seasonal norm. 
    Cold weather is also dominating Japan and South Korea, 
meaning by far the world's three biggest LNG importers are 
seeing a winter demand spike, which will likely support LNG 
prices for the coming months, traders said. 
     
 
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GRAPHIC: LNG & natural gas prices    http://reut.rs/2o2ga1a 
GRAPHIC: China LNG imports by country vs Asia spot LNG price    
http://reut.rs/2o5TU6K 
GRAPHIC: Temperatures in Japan, China, South Korea    http://reut.rs/2zb7poZ 
GRAPHIC: LNG tanker rates vs Asia LNG spot price    http://reut.rs/2kv8UWF 
INSIGHT-China's industrial heartland struggles in Beijing's 
fight against smog     urn:newsml:reuters.com:*:nL3N1O83EN 
Interactive Map    reuters://REALTIME/verb=Interactive%20Map/context=%3CNavigation%3E%3CEntities%3E%3CEntity%20type= 
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3E 
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 (Reporting by Henning Gloystein and Keith Wallis in SINGAPORE; 
Additional reporting by Osamu Tsukimori in TOKYO; Editing by 
Joseph Radford) 
 ((henning.gloystein@thomsonreuters.com; +65 6870 3263; Reuters 
Messaging: Twitter: @hgloystein)) 
 
Keywords: CHINA LNG/