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LNG SHIP RATES FALL TO ALMOST TWO-YEAR LOW.

Rates to ship liquefied natural gas fell to the lowest in almost two years as the opportunity to profit from shifting cargoes to Asia closed, curbing trading distances, according to Fearnley Securities AS.

Daily earnings for modern turbine vessels slid 6.3 percent last week to $89,000, the lowest since June 2011, according to data from Fearnley LNG, a shipbroker in Oslo. Rates retreated 41 percent since a high of $150,000 in June.

More vessels are available even amid increased bookings as cargoes travel shorter distances now that traders can't profit from moving them to Asia, Rikard Vabo, an Oslo-based analyst at Fearnley's investment-banking unit quoted as saying. Latin American buyers outbidding those in Asia leads to shorter distances, effectively reducing shipping demand, according to Erik Nikolai Stavseth, an analyst at Arctic Securities ASA.

"The spot market continues to be under pressure, despite a reasonably steady flow of fixtures," Vabo said in the report. "With the west-east arbitrage not being in the money at the moment, most spot deals seem to be intra-basin and for short periods, thus meaning there continues to be a steady amount of vessels being made available in the spot market."

Spot cargoes of LNG for delivery in the next four to eight weeks cost $14.30 per million to British thermal units in northeast Asia, $2.75 more than in southwest Europe, according to World Gas Intelligence, a research company. That compares with a $4.90 gap in February, when Asian prices reached a record high, data show.

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Publication:Pakistan & Gulf Economist
Geographic Code:90ASI
Date:May 26, 2013
Words:255
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