London (Platts)--9Jan2009

Weaker crude oil prices and falling European gas futures put pressure on
Asian LNG Friday, with buyers talking of bids as low as $6-7/MMBtu and traders
questioning when sellers would also move into single digits.

"We're waiting for the day when sellers change their minds," said one
trader. "And we can afford to wait because we have sufficient inventories."

Front-month ICE Brent futures were down some five dollars from the levels
seen Wednesday, to about $45/barrel, which would put the oil parity LNG price
at around $7.50/MMBtu. But traders said buyers were looking at prices a dollar
or so below that.

Prices at the UK's National Balancing Point also fell back Thursday, to
as low as 56 pence/therm (around $8.50/MMBtu) down about 10% from the highs of
the week. But one trader said sellers still seemed to be thinking of offers in
excess of $10/MMBtu.

That would put the midpoint between buyers and sellers at about
$8.75/MMBtu, still above the European and US prices for gas but not high
enough to divert any cargoes to Asia.

And buyers remained skeptical of any demand recovery in the near future,
with recessionary concerns producing severely reduced forecasts for domestic
demand in both Japan and Korea for 2009.

India has attracted a cargo in the last week in the wake of the shutdown
of the Dahej LNG terminal between January 7 and 12, with the price reportedly
just above $9/MMBtu. The country may look for further cargoes as an oil worker
strike has caused some disruption to gas networks.

Although cargoes into Japan and Korea usually trade above deliveries into
India, the distressed nature of the Indian market meant the price was not seen
as reflective of prices elsewhere in the region, traders said.

One trader said that a similar situation was persisting in the
Mediterranean basin, with Turkey and Greece reportedly the main players in the
spot market. That follows reduced supplies from Russia across Europe, which
has forced Turkey to seek alternatives, including LNG purchases.

Another trader said Asian purchases might occur if the Korean winter
carried on longer than expected. A third trader disputed that, however, saying
that temperature was not the main consideration at this time, since reduced
industrial demand due to the global financial situation was more important.

The only realistic light at the end of the tunnel was the possibility of
further reductions in European prices as the winter there draws to a close. UK
prices traditionally step down fairly quickly in April, and with the UK pound
fairly weak, that could lead to prices of under $7/MMBtu.

That could make the Asian market attractive again to sellers, one
Japanese trader said.

Traders also said that while buyers might expect lower prices in March
than currently, due to lower demand, sellers would be looking to offload
cargoes more quickly to avoid storage costs. That would leave prices for more
immediate delivery lower than those further out.