January 22, 2016 / 5:43 PM / 4 years ago

GLOBAL LNG-Prices extend slump on thin demand

* Tanker British Sapphire diverted from Egypt to Brazil

* Demand in Asia remained subdued

By Sarah McFarlane

LONDON, Jan 22 (Reuters) - Asian liquefied natural gas (LNG) prices extended their plunge this week, as slack demand and the collapse in oil prices weighed on the market.

March prices fell to around $5.10 per million British thermal units (mmBtu), from $5.60 the previous week, with prices for lean LNG from Australian projects below $5.00.

“Prices have been dropping by 10 to 20 cents a day, definitely lean cargoes are already in the $4s,” said a trader.

“The market is just reacting to where it should probably be.”

A glut in supply continued to overwhelm demand, even as lower prices have helped open new markets and opportunities, traders said.

Oil prices dropped to a 12-year low this week to trade below $30 per barrel, with energy markets having broadly suffered steep losses since the start of the year.

Talk of payment issues in newcomer Egypt persisted after LNG tanker British Sapphire was diverted to Brazil rather than discharge in Egypt.

Egypt’s state-owned EGAS said it postponed a LNG delivery from BP last month until later this year, rejecting suggestions there were any payment difficulties.

Demand in Asia remained subdued with traders saying Japanese and South Korean storage was near capacity.

“Japan just can’t take any more LNG,” said a trader, noting the country was on track to restart its third nuclear reactor in the coming weeks, after all were taken offline in the aftermath of the Fukushima disaster.

Fresh demand was seen from Pakistan’s State Oil Company which traders said was seeking to buy five cargoes of LNG for delivery from March to June, although no official tender has been launched.

Taiwan’s CPC has tendered to buy 60 cargoes of LNG for delivery from 2017 to 2021, traders said.

On the supply side Trinidad’s National Gas Company has notified the market of an upcoming tender to sell three cargoes between April 2016 and September 2017, while Indonesia’s Bontang export plant has launched a tender to sell four cargoes loading in March through May. (Reporting by Sarah McFarlane; Editing by David Evans)

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