ICIS Heren Launches Pricing for South American and US LNG

LONDON, November 17, 2010 /PRNewswire/ -- In the last year, South America has emerged as both a producer and importer of the Liquefied Natural Gas (LNG). This has had implications for global gas prices and supplies into both Europe and Asia. Argentina and Brazil have become among the premium spot LNG markets in the world, challenging the long-time domination of the East Asian markets. For the first time in the history of spot LNG trade, Japanese and South Korean traders are concerned about the price levels Argentina and Brazil can bid for the world's available LNG cargoes. And for the first time, LNG has been re-loaded from NorthWest Europe and the US for trade into South American markets.

As South American winter demand hits during the northern hemisphere summer, the appetite of these markets may have a long-term effect on the typical seasonal gas pricing patterns in Europe. The gap between summer and winter prices in Europe may become a thing of the past.

Some of the cargoes bound for Argentina and Brazil were sourced as re-loads in the United States. With increased domestic shale gas production and the attendant price slump on Henry Hub, the US Gulf region is rapidly becoming a filling station, where traders with demand elsewhere can purchase a cargo on an FOB basis either in Sabine Pass or Freeport. The number of applications for re-export licenses is growing fast as traders with capacity in the United States are looking to take part in the dynamic re-load trade, which was previously almost exclusive to importers at Belgium's Zeebrugge terminal. Some would argue that the United States could become a regional trading hub, creating extra levels of liquidity and flexibility in the Atlantic basin.

For these reasons, ICIS Heren is launching the first Chile spot LNG DES prices to add to its portfolio of South American coverage, which already includes Argentina and Brazil. It is also now able to provide a South American Pool Price, giving a pan-regional spot price for the first time.

Responding to demand of traders worldwide, ICIS Heren also introduces a US Gulf Re-load price, assessing the cost of FOB cargoes sourced in both Freeport and Sabine Pass.

In Europe, ICIS Heren launches Portugal spot LNG DES prices to expand its already wide coverage of the Mediterranean basin. Further reflecting the requests of LNG traders, ICIS Heren establishes an Iberia Pool Price to reflect the geographic proximity and similarity in demand patterns of Portugal and Spain, while retaining Greece, Turkey and Italy in its ICIS Heren Mediterranean Pool Price.

All of these prices are available to subscribers of ICIS Heren's LNG Markets Daily publication. Historical pricing and data feeds for these markets is also available.

Notes to Editors

Recent trade in South America

In a recently held tender, Argentina's Enarsa secured 9 cargoes understood to be priced between $9.60/MMBtu and $11.00/MMBtu for delivery between November and March, with another cargo tender closing on Monday 15th November.

Brazil's import season was expected to be completed in October, but Petrobras continues to procure into December, balancing the country's hydro-power generation capacity and availability of LNG on the global market. Petrobras managed to secure FOB cargoes this year from Qatar's RasGas, a re-load cargo from Zeebrugge and exploited the proximity of Nigeria's production when NLNG held tenders.

These import markets, coupled with massive production coming on-line in Peru, should make things interesting for European buyers this coming winter and have clearly increased liquidity on the global LNG market. Throughout this summer, Petrobras was paying a high premium to the UK NBP market, making it among the most attractive spot buyers.

Despite Argentina's healthy demand, the majors shy away from the country, citing concerns over the technological compatibility of their vessels with Excelerate's ship-to-ship transfer technology used in Bahia Blanca terminal. Argentina has instead provided outlets for investment banks, trading houses and majors that have limited access to markets elsewhere.

Chile is yet another important market emerging in the region, capable of sustaining healthy and prolonged demand levels to attract spot cargoes.

ICIS Heren is an information service provider for gas, liquefied natural gas, power, carbon and coal market intelligence. We publish a suite of tailored reports providing news, analysis, benchmark price assessments and indices. Through our reports we aim to bring liquidity and transparency to power and gas hubs, helping you analyse the sector and make informed business decisions.

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    Louise Boddy
    Head of Gas, Power, Carbon & Coal
    ICIS Heren
    t: +44-20-7911-1948
    f: +44-20-7911-1851
    e: [email protected]
    http://www.icis.com/heren

    Roman Kazmin
    LNG, Asia Pacific
    ICIS Heren
    t: +65-6780-4360
    f: +65-6789-8898
    e: [email protected]
    http://www.icis.com/heren

SOURCE ICIS Heren