Global LNG-Asian prices steady as supply tightens

By Oleg Vukmanovic

LONDON, Oct 12 (Reuters) - Asian spot prices of liquefied natural gas (LNG) steadied this week amid early signs that potential supply disruption from Nigeria and Indonesia may offset weak Japanese demand.

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

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

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

Adding to supply concerns, Indonesia's Tangguh oil and gas project, operated by British energy giant BP , faces production 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 seen any trades," he added.

South Korea's KOGAS , the world's top corporate buyer of LNG, said that it plans to buy more gas on the spot market to meet winter demand, potentially lifting demand and eventually prices.

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

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

Industry insiders have been watching for signals of new reactors coming online. Only two of Japan's 50 commercial nuclear reactors are on line and no more are likely to restart until next summer.

A newspaper report this week said that Japan's Electric Power Development was set to resume construction of the Ohma nuclear power plant in northern Japan by the end of the year.

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

In Europe, British prompt gas prices fell as warmer weather weighed on demand and Norway boosted deliveries to the UK after supply interruptions this week.

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

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

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

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Keywords: MARKETS LNG/