Prices for Long-Term LNG Increasing, Yet Suppliers See Reason for Caution

9 August 2018: 

Suppliers with LNG to sell are being pulled in two directions. On the one hand, demand is expected to increase in Northeast Asian markets, especially in China and South Korea. On the other hand, suppliers are cautious about pricing because of competition for credit-worthy buyers. They also know there is plenty of uncontracted volume available and that a slew of planned US projects are looking for buyers.

With several projects planning final investment decisions (FID) this year or next year, existing heads of agreements (HOA) may be converted to sales and purchase agreements (SPA) in the same timeframe. And new SPAs could also be signed through the end of 2019. As a result, contract prices are likely to increase because buyers are seeking more flexibility in terms of destinations and seasonality, both of which come at higher prices. Japanese buyers may also agree to slightly higher prices because some want contracts without any price reviews.

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