Argentina reworks LNG import deals as mild weather hits demand
By Oleg Vukmanovic and Hugh Bronstein
MILAN/BUENOS AIRES, Sept 1 (Reuters) - Argentina is diverting or cancelling incoming shipments of liquefied natural gas (LNG) after mild late winter temperatures curbed fuel demand and forced state-run buyer Enarsa to rework some deals.
South America's biggest LNG importer launched back-to-back tenders in June and July after a cold start to winter, lining up dozens of cargoes at bargain prices as global output continued to outpace demand.
But a milder streak in August has undercut demand for heating fuel and left state-run LNG importer Enarsa juggling a supply overhang, according to trading sources.
Enarsa and Argentina's energy ministry declined to comment.
Stubbornly high stock levels at Argentina's two import terminals, Bahia Blanca and Escobar, also mean there are physical restrictions on any further imports.
LNG trade sources who conduct business with Argentina say at least four cargoes destined for Bahia Blanca have been canceled or rescheduled so far due to the downturn in demand.
"The Bahia cargoes are being targeted for cancellation because it is more difficult to divert Escobar shipments," one of the sources said.
Argentina's LNG suppliers, which include major oil firms and leading trading houses, such as BP, Gunvor and Royal Dutch Shell, can levy penalty fees of up to $5 million for cancellations, one trading source said. Continuación...