China's CNOOC Spends Big In Panic Hoard of LNG

Liquefied natural gas prices have doubled in some regions over the past three months. One Xinjiang Uyghur autonomous region supplier had tripled the price to 6,300 yuan per ton by Sunday from early September

Liquefied natural gas prices have doubled in some regions over the past three months. One Xinjiang Uyghur autonomous region supplier had tripled the price to 6,300 yuan per ton by Sunday from early September

Liquefied natural gas (LNG) prices in China, one of Asia's largest users of the fuel, have soared to record highs as residential and industrial demand in the north has jumped after the government forced homes and factories to switch from coal as part of its war on smog that blankets the area in the winter.

While one could make the business case for storing LNG for later sale in case of a market contango, when prompt prices are lower than future prices, the current Asian spot LNG curve is in the opposite state of contango-backwardation-with LNG for January delivery nearing almost $10 per million British thermal units (mmBtu), while April delivery prices are at just over $7 per mmBtu.

The China Daily opinion and the tankers are the strongest signs yet that Beijing is increasingly anxious, just two weeks into the winter heating season, about the unintended consequences of its experiment to convert the northern part of the country to cleaner burning natural gas from coal.

There have been reports that insufficient gas supplies have left some residents without any heating, the paper said.

"Any measures to run after a "blue sky", including the "gas-replacing-coal" campaign some local governments have launched, should fully consider residents' needs and be tailored to local conditions", said the China Daily.

A snow-ice weather warning has been issued by Met Eireann
It warns of southerly winds of up to 65 km/h, with gusts of up to 110km/h along coastal areas, and is valid until 11pm tonight. Scattered snow showers are forecast to occur later on Thursday, Thursday night and into Friday.

Last year, CNOOC hired one tanker to hoard LNG supply, the source said, but noted that this year it is the first time that two tankers have been hired.

State-owned gas producers are trying to address public concerns about a potential heating crisis a day after the state planner ordered eight regions to "regulate" the gas market.

CNOOC said it aims to have 20 billion cubic metres (bcm) of natural gas on hand this winter.

Separately on Tuesday, the government said PetroChina has started up the third phase of the West-East gas transmission project.

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