Kuwait procures six LNG cargoes to meet peak summer requirements

Heat wave and extremely high temperatures have prompted Kuwait Petroleum Corporation to float and award a flurry of LNG spot purchase tenders recently, according to multiple market sources.

Since July 6, the Kuwait-based importer has purchased six LNG cargoes from the spot market to meet fuel requirements in the extreme heat for electricity production.

On Aug. 2, KPC awarded tender and purchased two LNG cargoes for September delivery at $10.2-$10.3/MMBtu. A market source aware of the development said that one cargo could be delivered in the second half of September and the other cargo could be rolled over into early October delivery.

The cargoes were heard awarded to a producer.

In another tender that closed on July 18, KPC awarded two cargoes for delivery window of Aug. 25-Sept. 30 at a price slightly higher than $10/MMBtu to a producer and a portfolio company.

A market source based in the Middle East said that the requirement by KPC is based on the comparison of LNG prices and fuel oil and not comparable to other benchmarks.

The source added that the timing of tenders being floated was also to get a competitive price offer.

KPC began its spot procurement for the summer when it closed its tender for July 6 and purchased two cargoes around a price of $11.1-$11.3/MMBtu.

The Middle East marker was assessed at $10.55/MMBtu on Aug. 4 and the LNG benchmark JKM was assessed at $10.99/MMBtu, according to data by S&P Global Commodity Insights.

Kuwait imported 6.45 million mt LNG in 2022, according to data by S&P Global. In January-July, Kuwait imported 3.46 million mt LNG, the data showed.

Summer demand

Market sources said that mostly spot procurement by KPC is done to meet power requirements in the peak summer period.

The average maximum temperature in July in Kuwait was nearly 47 degrees Celsius and it jumped to nearly 52 degrees Celsius Aug. 2, according to data by Meteorological Department of Kuwait.

A heatwave in Egypt has also prompted the government to schedule power cuts in most of its provinces, market sources said.

Iran declared a two-day public holiday on Aug. 1 because of an unprecedented heatwave with temperatures expected to touch 50 degrees Celsius.