BAKU, Azerbaijan, May 28. Liquefied natural gas (LNG) prices on the Asian market are expected at their highest through the current year until January 2023, Trend reports via Country Risk & Industry Research from Fitch Solutions.
Amid Russia-Ukraine conflict and the consequent uncertainties with Russian gas exports, along with an increased demand, Asian spot LNG prices are at unprecedented heights, the research said.
The benchmark spot prices in the region averaged $23.6 per mmBTU during the first two weeks of May, which is slightly lower than the average of $29.9 per mmBTU since the beginning of the year, but still significantly exceeds historical norms, the report said.
Meanwhile, according to the research, Russia remains the largest natural gas exporter, while standing fourth among main LNG exporters in the world (the US, Qatar, and Australia). Currently, Europe is considering increasing its spot LNG imports to somewhat reduce the dependence on Russian oil and gas supplies. This, in turn, will negatively impact with newly opening markets in Asia due to the direct competition for cargo.
The increased demand on the LNG in Asia is connected with large markets banishing COVID-19 pandemic-related restrictions, which led to upturn in their activity. Further growth in gas demand is expected in more gas-intensive industries, including agriculture, manufacturing, metallurgy, cement, paper production and petrochemicals, in turn, contributes to a positive increase in gas demand in the region in 2022.
Although higher prices and the resumption of quarantine measures in some markets, especially in China, worsen the prospects.
“The expectation for spot LNG prices is for them to continue to be elevated compared to historical norms, even as the impact of Russia’s invasion on prices begins to fade, with solid demand keeping the pressure on global supply, before stronger supply additions from the likes of Qatar from 2025 onward begin to loosen the market,” Fitch Solutions concluded.
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