Global liquefied natural gas (LNG) markets are stronger than some might have expected as demand in China, India and Latin America is supporting prices, according to Houston-based research firm Zeus Development Corp.

“The good news is that we never saw the ‘market of last resort’ scenario many expected, where cargoes would be dumped into U.S. Gulf Coast [USGC] terminals at any price,” said Zeus CEO Bob Nimocks. “Certainly, imports into the USGC were higher this year than last, but demand in Asia, India and Europe never fully evaporated.”

Last spring a number of market watchers predicted that the U.S. would be an LNG sink in the months to come (see Daily GPI, April 20; March 2). The tide of opinion was turning, though, this summer when analysts at Barclays Capital were among those calling off the LNG oversupply alarm. “Fears of a looming global LNG supply glut flooding the U.S. market with unwanted volumes pressured prices though most of H109,” the analysts said in a note Tuesday. “Nearly six months into the year, however, the tidal wave of LNG has not materialized, and expectations for future LNG import increases are being revised down,” the Barclays analysts wrote four months ago (see Daily GPI, July 2).

Gas sendout from U.S. LNG import terminals has been running higher this year than last. According to data out Monday from Tudor, Pickering, Holt & Co. Securities Inc., sendout during the third quarter averaged 1 Bcf/d versus 0.9 Bcf/d in the year-ago quarter. In the second quarter sendout averaged 1.3 Bcf/d, up from 0.9 Bcf/d in the second quarter of 2008. In October sendout averaged 1.1 Bcf/d, up from 0.9 Bcf/d in October 2008.

In China, cargoes from around the world (e.g., Tangguh, Indonesia; Balhaf, Yemen; and Ras Laffan, Qatar) have been arriving into its three operating terminals at Fujian, Guangdong, and Shanghai, Zeus said.

Long-term contracts for more LNG are being signed. For example, China Petroleum & Chemical Corp (Sinopec) announced intentions to sign a long-term sale and purchase agreement with ExxonMobil to buy Papua New Guinean LNG. On Oct. 22 CNOOC said it had started construction of a fourth China import terminal at Ningbo, Zhejiang. Many more are planned to give China better negotiating leverage for Russian pipeline gas, Zeus noted.

In India spot prices for LNG cargoes have been climbing to around $6/MMBtu as winter in the Northern Hemisphere approaches. On Oct. 29, Gail Ltd. announced that it would buy a cargo from Repsol for late November delivery at an ex-ship price between $6.50 and $6.60/MMBtu.

LNG fleets are also enjoying higher charter rates with demand across four continental markets: Asia, Europe, North America and South America. Charter rates for standard-sized ships have risen from some $25,000 per day to more than $40,000 per day.

Rising prices are also spurring new LNG project proposals. Zeus is tracking the advancement of plants in Australia, Papua New Guinea, Russia, Iran, Iraq, Egypt, Ghana, Nigeria, Cameroon, Gabon, Angola, Trinidad, Venezuela, Brazil and Alaska, the firm said. New import terminals and expansions are advancing in Brazil, Uruguay, Colombia, Jamaica, Chile, South Africa, Italy, Poland, Portugal, Israel, Dubai, Pakistan, India, Vietnam, Indonesia, Singapore and, of course, China, it noted.

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