An increased demand for liquid natural gas (LNG) in Japan, China and India have made prices reach new heights. Prices are expected to stay high since Japan has decreased its reliance on nuclear power.
Asian LNG prices have shot above $16 per million British thermal units (mmBtu) since the earthquake and tsunami in Japan on March 11. Prior to this prices were about $10 per mmBtu.
BG Group Plc (NYSE: BG) and ExxonMobil (NYSE: XOM) have had an increase in sales as the demand for LNG continues to grow in Asia.
Bloomberg shares that “LNG demand will go up, there’s no other alternative,” said P.K. Jain, the New Delhi-based director of finance at GAIL India Ltd. (GAIL), the nation’s biggest gas distributor and a co-owner of Petronet LNG Ltd., the largest buyer. “Demand will rise in Asia as Japan increases LNG use after Fukushima and even in Europe, with countries moving away from nuclear, long-term demand for LNG may rise.”
Imports into Japan made new records this August as the world’s top importer of LNG still is struggling with generating enough power since the earthquake destroyed use of a large portion of nuclear power supply.
The winter prices in Asia may rise from $16 per mmBtu to $20 per mmBtu. This is up 71 percent from 2010 and the highest prices since 2008.
Leading LNG exporter Qatar is increasing shipments to Asia, and Australia is aiming to triple production to 60 million tonnes a year by 2020 to help meet the demands of Asia.
Until next time,