Emerging economies in South and Southeast Asia are returning to the spot liquefied natural gas (LNG) market these days, despite the high prices of cargoes, creating additional gas demand globally amid a supply crunch that has seen European gas prices hit record highs in recent weeks.
Bangladesh, Pakistan, and India are back to buying spot LNG cargoes, despite their sensitivity to high prices, traders told Bloomberg on Thursday. Those countries, and others in south Asia, are forced to buy expensive LNG to avoid blackouts and to keep industries operational.
Pakistan, for example, is going through a shortage of natural gas and its vital textile exports slumped by 20 percent, or by $250 million in December, because mills were forced to shut down for two weeks amid a shortage of gas.
This winter, however, China looks well supplied with gas and LNG and could limit gains in spot LNG prices in Asia, traders tell Bloomberg.
Europe, on the other hand, is in a league of its own-LNG prices there shot up above the Asian LNG prices last month, prompting a fleet of dozens of tankers from the U.S. to head to Europe and LNG carriers to divert route from Asia to Europe.
Just before Christmas, European gas prices jumped to an all-time high after natural gas on a key pipeline from Russia to Germany reversed flow eastward and freezing temperatures took hold in many parts of Europe.
Following a decline in Europe's benchmark gas prices after Christmas due to the high number of LNG cargoes headed its way, the new year began with prices soaring again as gas deliveries from Russia via Ukraine and Poland continue to be low while another cold snap is headed to Europe.
On Wednesday, natural gas prices at the Dutch TTF hub, the benchmark for European gas, rose by 6 percent by mid-day, following a 30-percent jump on Tuesday. Early on Thursday, European and UK gas prices continued to rise on cold weather and low Russian supply.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More