Developing Asia faces $7 billion LNG bill

Developing Asian importers face a $7 billion rise in gas bills after Qatari LNG supplies were lost through the Strait of Hormuz, pressuring energy budgets.

Spot LNG prices rose after buyers sought replacement cargoes, increasing landed costs for importers across the region, officials said.

Officials said the interruption has translated into roughly $7 billion in additional import costs for emerging Asian markets this year and has tightened availability of near-term cargoes.

Strait supply disruption

Officials said buyers shifted to pricier spot purchases and longer shipping routes, which pushed up freight and insurance components of delivered LNG and widened the gap between contract and spot prices.

Traders flagged increased demand for short-dated cargoes and greater price volatility, creating a short-term trading opportunity in prompt physical and derivatives markets, traders said.

Some governments and utilities are reassessing procurement strategies and the role of long-term contracts as a result, officials said; the shift has prompted emergency tenders in a number of markets.

If flows through the Strait are not restored by September 30, officials said importers will likely report higher third-quarter energy bills and may reopen contract negotiations or seek additional short-term supply arrangements.