SYDNEY: Woodside Petroleum, 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 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 Thursday, a day after Woodside posted a 99pc drop in 2015 profit, its worst result in 13 years. “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.”
Spot purchases in recent years have been cheaper than cargoes bought under long-term deals and are forecast to cost 31pc 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.
Bloomberg-The Washington Post Service
