Price of LNG, brent crude to remain steady in 2H

Price of LNG, brent crude to remain steady in 2H
Business & Markets 2013
Written by Syarina Hyzah Zakaria
Tuesday, 11 June 2013 10:25


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KUALA LUMPUR: The price of liquefied natural gas (LNG) in Asia is expected to remain between US$12 and US$15 per million metric British thermal unit (mmbtu), while crude oil prices are expected to hover above US$100 (RM313) per barrel for the rest of the year.

These are the opinions of oil and gas (O&G) experts at the Asia Oil and Gas Conference 2013 which began yesterday.

Dr Fereidun Fesharaki, chairman of Facts Global Energy, an O&G consultancy focusing on energy markets in the East of the Suez, Europe and the US, said the LNG price largely depends on “where oil prices are” but stressed that gas prices cannot be less than US$12 per mmbtu.

Currently, LNG in Malaysia is sold to the power sector for RM13.47 per mmbtu, a fraction of the international market price of RM45 (US$15 per mmbtu). In South

Korea and Japan, LNG is priced at an average US$13 per mmbtu, while in the US it ranges between US$8 and US$9 per mmbtu.

Citi Research energy analyst Eric Lee said LNG prices in the next few years are expected to behave in a similar fashion as the oil market before the 2008 financial crisis. “It should look like oil markets in the 2000s — robust and any supply shocks will jolt the market,” he told delegates at AOGC.

Industry experts, including Credit Suisse global co-head of oil and gas research David Hewitt, have forecast Brent crude “to come in at US$115 per barrel with no significant weakening moving forward.”

Fesharaki concurred with the forecast, adding that he believes crude oil has a ceiling price of US$120 per barrel and a floor price of US$80 per barrel moving forward.


This article first appeared in The Edge Financial Daily, on June 11, 2013.