Reactor restarts to clip LNG tab: Facts

Bloomberg

Liquefied natural gas prices may fall by the end of the year as Japan, the world’s biggest buyer of the fuel, reopens some of its idled nuclear plants, according to Facts Global Energy.

Immediate supplies of LNG, or spot cargoes, may slip to a range of $15 to $16 per million British thermal units starting in the fourth quarter, Fereidun Fesharaki, the chairman of Facts, said in an interview in Kuala Lumpur Tuesday. Spot prices have risen to as high as $19 per million Btu as Japan boosts imports to replace shut nuclear capacity, he said.

“Japan is starting to reopen nuclear reactors this year and more next year,” Fesharaki said at the World Gas Conference Tuesday. “This will bring spot LNG prices down a little bit.”

Japan is buying record amounts of gas after it shut its nuclear plants for safety checks after the Fukushima disaster started last year, doubling gas’ share in power generation. Asia bought 64 percent of the 240.8 million tons of LNG sold globally in 2011, according to the International Group of Liquefied Natural Gas Importers, a Paris-based lobby group.

LNG is likely to remain in short supply for a number of years, De La Rey Venter, Royal Dutch Shell PLC’s global head of LNG, said at the conference. U.S. natural gas exports are competitive in most markets and it will be hard for world supply to meet demand without them, he said.

The U.S. may export LNG to Asia by 2018, Fesharaki said. U.S. shipments may reach 40 million metric tons by 2022.

U.S. natural gas prices, which fell to the lowest level in a decade in April, are likely to rebound to as much as $5 per million Btu within five years as users up consumption, he said. Gas futures for July delivery were at $2.444 per million Btu on the New York Mercantile Exchange Tuesday.