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Global LNG-Asian prices steady as supply tightens

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By Oleg Vukmanovic

LONDON, Oct 12 (Reuters) - Asian spot prices of liquefiednatural gas (LNG) steadied this week amid early signsthat potential supply disruption from Nigeria and Indonesia mayoffset weak Japanese demand.

The price of spot LNG for November delivery was pegged atabout $12.80 per million British thermal units (mmBtu), slightlyhigher than the $12.75/mmBtu last week because of the risk oftightening supplies and signs of greater South Korean demand.

Nigeria declared a "precautionary" force majeure on LNGdeliveries from its Bonny Island export plant in the Niger Deltalast week after oil thieves damaged a gas pipeline supplying theplant, a spokesman for Nigeria LNG said.

But the spokesman said that no shipments from the plant haveyet been cancelled as a result of the force majeure.

Adding to supply concerns, Indonesia's Tangguh oil and gasproject, operated by British energy giant BP , facesproduction delays that could hamper its capacity to deliver LNG.

"I haven't heard of any new deals in Asia since last week,but the Nigerian force majeure is firming European LNG prices,"a source from an LNG trading house said.

"Directionally, European prices are up, but I have not seenany trades," he added.

South Korea's KOGAS , the world's top corporatebuyer of LNG, said that it plans to buy more gas on the spotmarket to meet winter demand, potentially lifting demand andeventually prices.

Prices have fallen rapidly after hitting a high of about$18/mmBtu in May, when North Asian buyers were stocking up withspot supplies ahead of peak demand periods.

LNG has been compensating for the closure of most of Japan'snuclear reactors after the Fukushima nuclear disaster. Beforethe earthquake and tsunami of March 2011 supplied, nuclearreactors provided about a third of the country's power needs.

Industry insiders have been watching for signals of newreactors coming online. Only two of Japan's 50 commercialnuclear reactors are on line and no more are likely to restartuntil next summer.

A newspaper report this week said that Japan's ElectricPower Development was set to resume construction of theOhma nuclear power plant in northern Japan by the end of theyear.

The restart of coal-fired plants damaged by the tsunamicould also reduce demand for LNG.

In Europe, British prompt gas prices fell as warmer weatherweighed on demand and Norway boosted deliveries to the UK aftersupply interruptions this week.

In Mediterranean Europe, spot LNG prices edged higher toslightly above $11/mmBtu, Turkey's Naturgaz Managing DirectorAli Arif Akturk told Reuters this week.

In the United States, U.S. natural gas futures edged lowerearly on Friday, which traders blamed on profit-taking after thefront month rose to a fresh 2012 high in electronic trade.

(Additional reporting by Fergus Jensen in Jakarta and RebekahKebede in Perth; Editing by David Goodman)

((Oleg.Vukmanovic@thomsonreuters.com)(44 207 542 0014)(ReutersMessaging: oleg.vukmanovic.thomsonreuters.com@reuters.net))

Keywords: MARKETS LNG/