June 7, 2019 / 7:34 AM / 8 months ago

Platts gets first bid for European LNG in its pricing process

LONDON, June 7 (Reuters) - Pricing agency Platts received on Thursday its first transparent bid for a cargo of liquefied natural gas (LNG) for delivery into Europe, signalling greater openness in pricing LNG globally as well as underscoring the importance of Europe to the LNG trade.

Most LNG is traded on long-term contracts with pricing kept a commercial secret but an increasing portion of the chilled gas, around 25 percent, is being sold on a prompt spot basis.

While such trades are also kept from public view, Platts assesses the Asian spot price with its Japan Korea Marker (JKM) process using anonymous sources and, since last June, offers, bids and trades volunteered openly.

Now, a bid has been volunteered openly for a potential spot LNG trade into Europe, Platts said in emailed comments.

“The market has clearly shown its appetite for a transparent demonstration of the value of LNG delivered into Europe in its own right,” Jonty Rushforth, head of the energy price group at S&P Global Platts, said.

“Given the increasing complexity of the physical market and changing trade flows, it is ever more important for participants to have clarity on the value of LNG,” he said.

The bid came from Trafigura for a cargo for delivery into Barcelona at the end of July for $3.30 per million British thermal units (mmBtu), which the trading house then raised to $3.45 per mmBtu.

A surge in LNG production from new liquefaction plants around the world coupled with lacklustre demand in Asia has prompted an influx of imports into Europe, helping to depress natural gas prices there.

The Dutch TTF month-ahead gas price, a benchmark for European gas and LNG prices, has almost halved from the start of the year to 11.35 euros per megawatt hour, which is the equivalent of $3.75 per mmBtu.

Asian spot LNG prices LNG-AS have halved to around $4.30 per mmBtu this week from $8.75 at the start of the year, Reuters assessments show.

Reporting by Sabina Zawadzki; Editing by Dale Hudson

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