Article content

Liquefied natural gas buyers are accelerating discussions to buy more fuel from the United States as the Iran war and turmoil over the Strait of Hormuz forces them to seek alternatives to suppliers in the Middle East.

Sign In or Create an Account

or View more offersArticle content

Companies in Thailand, Pakistan and Bangladesh are in talks to sign long-term contracts with U.S. suppliers, officials said at the Gastech conference in Bangkok. China Gas Holdings Ltd. signed a rare sales agreement this week from U.S. exporter Venture Global Inc. scheduled to start in 2030, despite tensions between Washington and Beijing.

Article contentWe apologize, but this video has failed to load.Try refreshing your browser, or
tap here to see other videos from our team.We apologize, but this video has failed to load.Try refreshing your browser, or
tap here to see other videos from our team.Article content

Story continues below

This advertisement has not loaded yet, but your article continues below.

Article content

The move comes as disruption to Hormuz — through which about a fifth of all LNG flowed before the war — enter a seventh month and Qatar’s massive export terminal remains largely offline after being damaged by missile strikes. The loss of supply from Qatar and the United Arab Emirates to key Asian customers, coupled by high spot prices, is lifting utility bills and triggering energy shortages across parts of Asia.

Article contentArticle content

“Buyers around the world really are more focused on diversifying their LNG procurement,” Yukio Kani, the chairman of Jera Co., one of the world’s biggest LNG buyers, said on Bloomberg TV. “Some rely too much on Qatar, like more than 50 per cent or 60 per cent.”

Article content

Jera — Japan’s top gas importer — has spent the last decade diversifying its sources of supply and now depends on the Middle East for about five per cent of its LNG, Kani said at the Gastech conference in Bangkok. It imports most of that through long-term contracts — a strategy that other nations should follow to reduce exposure to the volatile spot market, according to Kani.

Article content

Inpex Corp., the Japanese energy producer, is considering investing in an LNG export project in the U.S., chief executive Takayuki Ueda said in an interview. The flow of LNG through the strait, he said, “will not return to the previous status quo.”

Article content

Story continues below

This advertisement has not loaded yet, but your article continues below.

Article content

“Diversification of our portfolio — in our words, portfolio resiliency — is important,” Ueda said.

Article contentRead More

  1. Canada in talks to sell nuclear-power technology, LNG to Poland
  2. About $500 billion in natural gas lies off Newfoundland’s coast. Can Canada tap it?
  3. Story continues belowThis advertisement has not loaded yet, but your article continues below.

Article content

To be sure, companies are looking beyond the U.S. as well. Inpex is exploring projects in South America, Ueda said. Thai company officials at Gastech, meanwhile, showed interest in LNG from Canada and the Asia Pacific.

Article content

U.S. suppliers tend to offer among the lowest prices for longterm contracts, in part because the agreements are linked to the nation’s Henry Hub benchmark and vast shale reserves have kept domestic prices low. Shipments from the U.S. under long-term contracts are being delivered to Asia at US$8 per million British thermal units, according to officials at U.S. and Japanese companies.

Article content

For comparison, LNG prices in the spot market for Asia are about US$30 per million Btu as European and Asian buyers compete for a limited pool of supply.

Article content

However, the prices of some U.S. contracts have increased, due in part to supply chain bottlenecks and a reaction to the current tightness in the market, according to company officials and traders. That, plus a general shift to reduce exposure to LNG, may act as a hurdle to any fast deals.