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Platts JKM prices for Apr LNG delivery fall 21% on month to $6.079/MMBtu

Singapore (Platts)--16 Mar 2017 1018 am EDT/1418 GMT


The Platts JKM for April LNG delivery averaged $6.079/MMBtu over February 16-March 15, sliding 20.5% from a month earlier on expectations of rising supply and limited demand.

Train two of the Gorgon project in Western Australia resumed production at the end of February, following its recent shutdown.

The prospects for new LNG supplies grew as market players focused on the expected startups of Australia's Gorgon Train 3, US Sabine Pass Train 3 and Petronas' floating LNG project, all expected to start up in March and all exerting bearish pressure on the market.

There was also re-selling of long-term contracted volumes, with Unipec actively re-marketing volumes in February, expected to be at least one cargo a month, with the exact volumes dependent on Chinese domestic demand, from their 7.6 million mt/year LNG contract from eastern Australia's APLNG project.

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In addition, at the end of February, multi-cargo sell-tenders from Papua New Guinea's PNG LNG, as well as Russia's Sakhalin injected significant supply into the market. Sakhalin's May 2017-March 2018 DES sell tender of six cargoes were heard awarded to BP, JERA and another northeast Asian utility at 11.5% of Brent crude price. A further three cargoes for April delivery was awarded at $6.10-6.20/MMBtu, to Mitsui, PetroChina and Gazprom, sources said.

PNG LNG's six-cargo tender, which closed on February 22, for April-November deliveries were heard awarded to CPC, as well as several non-project offtakers.

The market also had to absorb more sell tenders, with Argentina's Enarsa awarding a total of 20 cargoes, in a tender which closed March 7. The results of the Enarsa tender awarded were published by the company, Wednesday. Super major Shell was awarded all of the tender slots, save those for June 6 and July 21 delivery into Escobar, which were awarded to Petrobras and Gas Natural Fenosa, respectively. All of the Shell cargoes for July and August were sold on a Henry Hub basis.

Falling NBP and crude oil prices also lead to bearish near-term sentiment.

But prices stabilized in the second week of March, as end-users from Japan, India and South Korea with low inventories sought to take advantage of low prices. LNG buyers closed buy tenders in the first half of March, including India's Gail and IOC, South Korea's POSCO, as well as Japan's Kansai Electric and Tohoku Electric. Regarding sell tenders, Angola LNG, Bontang and ADGAS also all closed tenders it the first half of March.

As far as alternative fuels go, in the US, front-month NYMEX Henry Hub gas futures averaged $2.823/MMBtu, rising 59.5% on the year, but falling 11.9% on the month.

Platts FOB Singapore 180 CST fuel oil fell 2.1% month on month and rose 94.2% year on year over the period, averaging $8.141/MMBtu.

--Kenneth Foo, kenneth.foo@spglobal.com
--Edited Jonathan Dart, jonathan.dart@spglobal.com

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