Bullish sentiment in the Far East News »

Bullish sentiment in the Far East
The recent tender from Australia’s NWS project has been finalised, with three cargoes being awarded in total for lifting set in early October. According to sources familiar with the tender, Shell is understood to have won one cargo. The other two cargoes were awarded to another major and an East Asian utility, sources said. A trader active in the tender added that two cargoes were sold on a tender basis, with the other sold through bilateral negotiations with what is likely to be an equity holder in the project. All three cargoes were sold on an FOB basis, although DES bids were also accepted in the tender.
In a related development, an East Asian trading source said that CPC Corp Taiwan has purchased three cargoes in its recent tender for delivery in late September to early October. According to trading sources, the winning parties for the CPC tender included Shell, BG and Qalhat LNG, with the median price recorded at $8.40/MMBtu.
Qalhat LNG’s sale to CPC will likely require diversion from the Atlantic basin to cover its long-term commitment to Unión Fenosa Gas in Spain. Shell is likely to cover the CPC position with a cargo secured in the latest NWS tender, but could feasibily reserve a Sakhalin LNG cargo for the transaction.
In Japan, traders pointed to fundamental factors, including warm temperatures (see related story on page 3) and higher expectations for industrial growth. According to Japanese utility sources, the firm bids for delivery in October are still trailing at around $8.20/MMBtu, with offers fluctuating between $8.50/MMBtu and $8.60/MMBtu. The price levels on the NBP, which have increased significantly on the forward curve, are adding to the bullish sentiment. “I think the buyers are waiting to see if the price pressure on the NBP eases off before locking themselves in for November delivery,” a Japanese trading source said, although the source added that such a scenario was unlikely to materialise. “I think that buyers are better off locking in spot volumes earlier, instead of waiting for a price increase.”
A trading source in Japan told ICIS Heren that he expected to see between five and seven cargoes sold to East Asia on a monthly basis going forward, with the numbers likely to increase in the course of the winter season.
In Europe, both Unión Fenosa and Iberdrola are continuing to explore diversion opportunities. Iberdrola is likely to offer a cargo sourced in Nigeria for delivery to East Asia if the counterparty is willing to cover the company’s position in Spain and share the profits for diversion upside. Unión Fenosa is likely to be similarly flexible with its Qalhat volumes. The utility is reportedly seeking as much as a 50% profit share for any upside that resulted from diversion of Omani volumes to East Asia.