Asian LNG Buyers Delay Deals Amid Oversupply, Woodside Says
Woodside Petroleum Ltd., the Australian liquefied natural gas producer, said Asian buyers are delaying signing new long-term supply contracts amid forecasts for a growing glut.
“They’re being very short-term and opportunistic, and very commercial,” Chief Executive Officer Peter Coleman said in an interview Thursday in Sydney. “There are no new long-term contracts being signed, or very, very few.”
Crude has fallen so much that LNG cargoes purchased under long-term, oil-linked contracts are actually cheaper than spot deals, Coleman said a day after Woodside posted a 99 percent drop in 2015 profit, its worst result in 13 years. Brent, the global benchmark crude, has dropped about 70 percent from a 2014 peak and traded at $34.73 a barrel at 7:43 a.m. London time.
“Because of where the oil price has dropped to -- I doubt any buyer had that in their outlook -- it’s providing a situation where spot is a bit higher than the long term,” he said. “That will work its way out,” possibly when oil gets to $45 or $50 a barrel, he said.
Spot purchases in recent years have been cheaper than cargoes bought under long-term deals and are forecast to cost 31 percent less than contract purchases this year, analysts at Goldman Sachs Group Inc. said in a report Feb. 15. The collapse in crude prices has narrowed the spread between spot and oil-indexed prices, though the appeal of spot deals will increase as oil prices rise toward the end of the year, according to the Goldman analysts