Last Updated: September 06. 2010 10:28PM UAE / September 6. 2010 6:28PM GMT Japan, the worlds biggest buyer of natural gas shipped by tanker, stepped up imports by 9.5 per cent in the first half of the year, the government reported today.
The new data are the latest sign that a downturn in the liquefied natural gas (LNG) market has not been as severe as predicted, and boosts the fortunes of Abu Dhabi, Qatar, and other Gulf exporters, analysts said.
Japan this year is expected to buy all of the gas promised to it in long-term contracts, and will continue to increase the rates it pays for spot cargoes that are not governed by the contracts, said Chris Holmes, an LNG analyst in London for Purvin and Gertz, the energy consultancy.
The outlook for Asia is pretty strong at the moment, he said. The market has not been quite as oversupplied as we thought 12 months ago.
The strong Japanese data come several weeks after Korea Gas, South Koreas state-run gas importer, reported that July imports had increased 32 per cent compared with the same period last year.
Japans average price for LNG imports increased 39 per cent in July from the same month last year, and reached US$11.60 per million British thermal units (BTU), about double international market rates.
Japanese firms have contracts to buy 4.7 million tonnes of LNG per year from Abu Dhabi, and 7.2 million tonnes from Qatar. They regularly buy another several million tonnes from the two suppliers on the spot market.
Prices for contracted LNG shipments are linked to the price Japan pays for crude oil, and remained relatively strong over the past 12 months. Prices for spot cargoes are not governed by the same link and sank to record lows last year as Asian growth slowed.
Mr Holmes expects spot prices to approach parity with contracted rates within 12 months as a result of steady consumption growth.
The global LNG market was upended last year as the global downturn sapped demand.
