Gas Crunch Pushes Anxious Buyers to Pay More for Contracts - Bloomberg
Worries that the current shortage of liquefied natural gas will persist through the middle of the decade are triggering a rush to sign long-term deals, pushing up the price of contracts for the super-chilled fuel.
While contracts had been getting cheaper over the last few years due to rising supply from Qatar and end-users favoring the more affordable spot market, the anxiety spurred by the current supply crunch has reversed the trend. There’s a lack of uncontracted gas available through 2025, which is boosting oil-indexed agreements, according to consultancy Wood Mackenzie Ltd.
“2021 saw the return of contracting activity to its highest levels over the last five years,” Valery Chow, WoodMac’s head of Asia-Pacific gas and LNG research, said in a report released Thursday. “Asia accounted for 85% of global contracts signed, with China leading the pack.”
China’s Beijing Gas Group Co. recently signed a deal to buy LNG from a portfolio player at about 12.7% to 12.9% of the price of Brent crude. By comparison, Qatar was signing supply agreements to customers in Asia’s largest economy in the low-10% range early last year.
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