Asian LNG Buyers to Head to China for More Price Talks in Feb
OREANDA-NEWS. December 20, 2013. Asian liquefied natural gas (LNG) buyers plan to meet again in China in February to continue looking for ways to leverage their buying power for lower prices, industry officials said at the end of talks.
Officials from India, China, South Korea, Japan and Taiwan which import about 70 per cent of the world’s LNG discussed the demand outlook, pricing and supply sources, they said after the two-day meeting, but admitted getting results was a challenge.
Asian demand for LNG is rising fast, due to economic expansion, nuclear plant shutdowns in Japan and South Korea and a shift towards cleaner-burning gas in China’s smog-choked cities. This has helped push LNG prices to near record levels. “There is a commonality of thought. How it can be translated into action is a challenge,” said one of the sources. “Now all the countries are saying prices are too high.”
He added that a small initiative by big importers Japan and South Korea could have lot of impact on LNG prices. Indian and Japanese officials have been at the forefront of the push to cut prices. The two countries are in talks to jointly procure LNG, India’s oil secretary Vivek Rae said last week.
Asian importers say they are charged an excessive premium to other regions because of a practice of linking LNG contracts to oil prices. And they want more flexibility in contracts over ship destinations to free up the market.
Ahead of the Asian LNG Market Forum’s meeting in February, there are also plans for chief executives of LNG importing companies to hold talks next month, another source said.
“There were preliminary discussions on ways to source LNG and the sharing of country-specific information,” the second source said. The sources did not wish to be identified because of the sensitivity of the issue. While LNG demand is rising, new, uncontracted sources of supply aren’t likely until at least the end of the decade.