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Demand pushes LNG prices sharply

June 23, 2011 at 7:31 AM   |   Comments

TOKYO, June 23 (UPI) -- The crisis at Japan's Fukushima Daiichi plant nuclear plant is adding to the price pressure on liquefied natural gas, experts said.

LNG prices, pressed by growing demand from China and India, already were on the rise prior to the March 11 earthquake-tsunami disaster that set off the Fukushima crisis, the Asahi Shimbun reported Thursday.

The LNG price pressure is also coming from Europe, where there are efforts to reduce reliance on nuclear power in the wake of Fukushima.

The report said short-term trading prices of LNG imported by Japan have more than tripled in the past two years, and sharper rises have been seen since March 11. Prices in Japan currently are between $13 and $14 per 1 million British thermal units.

"The price will skyrocket (by) next winter," Akira Ishii, special adviser to Japan Oil, Gas and Metals National Corp., told the newspaper. "Japan will compete hard against European countries and South Korea to procure fuel for heating equipment. The price will begin to rise in autumn and could reach nearly $20."

Chancellor Angela Merkel has already announced Germany will phase out nuclear power generation while other countries plan to review their reliance on nuclear power.

Russia, the world's largest LNG exporter, is looking to profit from the situation.

China, where LNG meets 4 percent of the total energy demand, wants to increase LNG use to more than 10 percent by 2020.

So far, China has not been able to bring down the price of natural gas it wants to buy from Russia in a deal estimated at $700 billion for 30 years. India's LNG imports also are rising.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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