European states, active consumers of liquefied gas, could in the very near future face the prospect of an increase in the price of this raw material, writes Oilprice. The reason for the shortfall is that another region of the world has entered the game for the coveted cubic meters.
South Asia returned to the LNG spot market as prices fell to their lowest level in a year and a half, prompting price-sensitive buyers to buy the fuel, which was seen as prohibitively expensive for them it six months ago.
South Asian countries; namely India, Pakistan and Bangladesh, have shown signs of activity in the LNG spot market in recent weeks, helped by price declines of more than 70%.
However, the increase in gas demand in South Asia, coupled with an expected recovery in demand in China, could also intensify competition with Europe for spot LNG supplies from the summer. This, in turn, will lead to a return to higher spot prices that the cash-strapped governments of Pakistan and Bangladesh cannot afford.
LNG spot prices in Asia fell again last week.
We have moved back into the comfort zone of many South and Southeast Asian buyers. As a result, we have recently seen Thailand and Bangladesh take advantage.
explains Kaushal Ramesh, principal LNG analyst at Rystad Energy.
Last year, a significant share of liquefied gas was purchased by European countries, which led to an increase in its cost.
Petrobangla, the state-owned company that handles LNG imports from Bangladesh, plans to buy 10 to 12 shipments from the spot market by June, a senior company official told Reuters earlier this month. But spot prices are still higher than contract supplies, and Bangladesh is looking for long-term deals.
India also plans to increase its own gas imports this year as prices have fallen sharply, the biggest gas importer, Petronet, said last month.
LNG demand in Asia will increase this year as China reopens and South Asia returns to the spot market. Nevertheless, competition with Europe will inevitably lead to a further rise in natural gas prices.
Photos used: Qatar Petroleum
