Trend of Natural Gas and LNG Prices
- The assessed spot LNG price, JKM, for near-month delivery to Northeast Asia shot up to an all-time high of USD 32.5 per million Btu on 12 January 2021 (for delivery in February 2021). However, as the cold weather eased and additional cargoes were secured, the price for delivery in March stabilised down to the USD 8s in late January, below USD 7 in early February, to the low of USD 6s in late February. According to preliminary figures of Japan's Ministry of Economy, Trade and Industry (METI), the average of the contract-based price of spot-LNG in January 2021 was USD 18.5 (USD 11.1 higher than December) and the average of the arrival-based price was USD 15.5 (USD 8.7 higher than December), the highest since March 2014 when METI started publishing spot LNG prices.
- The Henry Hub price for delivery in the following month was stable throughout January compared to Europe and Asia, although the January weather in the United States was slightly colder than 2020. In February, low temperatures and continued massive LNG exports pushed prices up slightly, and in the middle of February, prices exceeded USD 3 due to the cold wave. As the price gap between HH and the spot gas market in other regions remains large, LNG export volumes are expected to remain high, supporting the HH price. In addition, some regions in the United States have seen record high spot gas prices because of the cold wave.
- The TTF price for delivery in the following month, following the low of USD 7s in January, has fallen since beginning of February to below USD 6 in late February, hovering in the low of USD 5s. As the lower-than-one-year-earlier temperature encouraged gas consumption in Europe, inventories in gas storage went down to below the 5-year average. However, the falling Asian spot LNG price is expected to lead to a recovery of LNG import volumes in Europe.
- Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 8.45 in January 2021. The average landed prices of LNG in Japan from the ASEAN region, the Middle East region and Russia in the month were USD 8.00, USD 7.51, USD 8.09, respectively, lower than the average price, while the price from the United States was USD 9.92, higher than the average. Japan’s average LNG import price (USD 8.45) was only 3% higher than the Northeast Asian average spot LNG price (USD 8.17) in January, narrowing the gap from 400% in June 2020. Japan imported 8.06 million tonnes of LNG in January 2021, 7.3% higher than same month of 2020, the first time since February 2018 that the volume exceeded 8 million tonnes, due to the cold weather. In addition, the LNG import of 0.95 million tonnes from the United States was the largest monthly volume since the import from the country began.
Mid- to long-term trend
- JKM was around USD 6 in winter 2019 but started to decline from January 2020, reaching an all-time low of USD 1.83 at the end of April 2020 due to increased supply and decreased demand caused by COVID-19. After hovering in the USD 2s from May until July, it rose again from August 2020 due to supply disruptions at several production facilities to over USD 10 in December, reaching an all-time high of USD 32.5 in January 2021 because of the cold wave. The price spike, as well as the preceding plunge, was unprecedented. However, it is assumed that the number of cargoes that were traded at such extreme price levels is limited.
- Japan's average LNG import price had been declining to the USD 5s in August - October 2020, the lowest level since January 2005, due to the collapse of international crude oil prices in March 2020. Then the average price rose to the USD 7s in December 2020 as crude oil prices recovered. In January 2021, the average price further went up to the middle of USD 8s, presumably impacted by high spot LNG prices and the increasing import from the United States at relatively high prices.
- Asian spot LNG prices were significantly lower than Japan's average LNG import price from the beginning of 2019 to September 2020. The reasons for this trend are believed to be the declining demand from Japan and Korea due to COVID-19 and high level of inventories, against abundant LNG supply from the United States and the rest of the world. The combined LNG imports by Japan, Korea, and Chinese Taipei in January 2021 were 13.93 million tonnes, increasing year-on-year by 8.5%, or 1.095 million tonnes due to the cold wave.
*There is no data service for downloading. You are allowed to use this graph image only for internal purpose and shall not store, reproduce or further distribute it to any third party for any purpose in any format or by any means.
Henry Hub price: NYMEX Futures and Options, CME Group
NBP price: ICE Futures Europe, Intercontinental Exchange
TTF price: ICE Futures Europe, Intercontinental Exchange
JKM: LNG Japan/Korea Marker© 2021 by S&P Global Platts, a division of S&P Global Inc.
METI spot price: Spot LNG Price Statistics, Ministry of Economy, Trade and Industry
Japan’s average LNG import price: Trade Statistics of Japan
Before reading the information on this page, you acknowledge and agree that:
- The Platts Material has been prepared by S&P Global Platts (Source: © 2021 by S&P Global Platts, a division of S&P Global Inc. All rights reserved).
- You agree to only use the Platts Material for internal purposes and shall not store, reproduce or further distribute the Platts Material to any third party for any purpose in any format or by any means, including via the Internet, Intranet or other type of network.
- You acknowledge and agree that Platts, its affiliates, or its licensors own the Platts Material, and all intellectual property rights therein, including, without limitation, any patent, trade secret, copyright, and trademark rights (whether or not such rights are registered).
- Platts, its affiliates, and their respective third party licensors disclaim any and all warranties and representations, express or implied, including any warranties of merchantability or fitness for a particular purpose or use with respect to the Platts Material, including any information or data contained therein or the results obtained by their use or the performance thereof. None of Platts, its affiliates, or their respective third party licensors guarantees the adequacy, accuracy, timeliness or completeness of the Platts Material or any component thereof or of any communications with respect thereto. None of Platts, its affiliates or their respective third party licensors shall be subject to any damages or liability for any errors, omissions, interruptions, or delays in the Platts Material. The Platts Material and all components thereof are provided on an 'as is' basis and JOGMEC website users’ use of the Platts Material is at their own risk. The Platts Material should not be regarded as financial or other professional advice.
- Notwithstanding anything to the contrary, in no event whatsoever shall Platts, its affiliates or their respective third party licensors be liable for any indirect, special, incidental, punitive or consequential damages, including but not limited to, loss of profits, trading loss, lost time or goodwill, even if they have been advised of the possibility of such damages, whether in contract, tort (including negligence), strict liability or otherwise. None of Platts, its affiliates or their respective third party licensors shall be liable for any claims against JOGMEC website users by third parties.
Trend of Natural Gas and LNG Inventories
- Japan's LNG inventories as of the end of October 2020 stood at 4.33 million tonnes, an increase of 4.8% or 0.20 million tonnes from the preceding month, and a decrease of 7.3% from 2019. The LNG inventories significantly decreased in August 2020. Thereafter until the end of October, they remained at about the same level as the five-year average.
- The LNG inventories for city-gas supply in October were 1.87 million tonnes, 4.9% lower than September 2020, and 19.4% lower than October 2019. LNG consumption for city-gas stood at 2.26 million tonnes, increasing by 2.0% year-on-year in October 2020. City-gas companies received 2.17 million tonnes of LNG in October, also increasing year-on-year by 2.2%. It was the first year-on-year increase of LNG receipts by city-gas companies since March 2020. However, the LNG inventories decreased in October from September 2020 to a much lower level than October 2019, as the consumption was greater than the received volumes.
- The LNG inventories for power generation in October 2020 were 2.46 million tonnes, increasing by 13.6% from September 2020 and 4.6% higher than October 2019. LNG consumption in October 2020 increased by 2.3% year-on-year to 3.72 million tonnes, while LNG receipts for power generation in the month decreased by 10.1% year-on-year to 3.98 million tonnes. As a result, the LNG inventories for power generation at the end of the month were larger than both September 2020 and October 2019.
- According to the Japan Meteorological Agency's forecast, the average temperature in the country between February and April is not expected to be lower than the average over the previous 30 years. From the middle of December to the middle of January, the nation's LNG inventories were at a low-level as a result of frequent cold spells across the country. It is expected that the LNG consumptions for power generation and city-gas use will settle within the normal range after February, and the LNG inventory level will return to a comfortable level.
Compiled based on data from Gas Business and Thermal Power Generation Statistics, Ministry of Economy, Trade and Industry.As the inventory data is available for the period only after January 2008, the five-year average is applicable only after January 2013.
- As of 19 February 2021, working gas in underground natural gas storage in the United States was 1.94 Tcf, a 32.6% decrease from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 11.7% lower than those at the same time in 2020 and were 161 Bcf higher than the past five-year average. According to EIA, the second-largest weekly total net withdrawals ever reported for the Lower 48 states following a week characterized by widespread extreme cold throughout most of the country, which increased heating demand for natural gas.
- According to the monthly Short-Term Energy Outlook (STEO) released by the EIA in February 2021, inventory withdrawals were 0.70 Tcf in January 2021. The January withdrawals were a lower rate than EIA forecast in STEO released in January 2021. The reason is that the average temperature in January was higher than usual and the consumption of natural gas used for space heating decreased. However, EIA forecasts that declines in U.S. natural gas production in winter 2020/2021 compared with winter 2019/2020 will more than offset the declines in natural gas consumption, which will contribute to natural gas storage returning to levels near the five-year average by the end of winter 2020/2021. (At the time of publication, the impact of the cold wave has not been reflected.)
Compiled based on data from the U.S. Energy Information Administration (EIA)
- As of 17 February 2021, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) members (including European Union [EU] member companies and non-EU [Serbia and Ukraine] member companies) was 445 TWh. The inventories were 34.3% down from the previous month and 38.0% lower year-on-year, and 50.0 TWh lower than the five-year average. On 23 February 2021, the working gas volume in storage represented 37.9% of the capacity, staying within the range of 33% - 65% in the same period over the past five years, but below the five-year average.
- The natural gas inventories in European underground storage facilities have declined sharply since the beginning of January 2021. The inventories in the middle of January were lower than the five-year average for the first time since August 2018, and since then, they have kept decreasing. LNG imports to Europe have been at a low level since the second half of 2020, especially in the winter season, which is believed to have been affected by the spike of Asian spot LNG prices. Among the countries with large storage capacity, the inventories in Germany have declined particularly quickly with the working gas volume in storage representing 32% of the capacity as of 17 February. This is the lowest level since February 2018.
Compiled based on data from Gas Infrastructure Europe, Aggregated Gas Storage Inventory (AGSI). As the inventory data is available for the period only after January 2011, the five-year average is applicable only after January 2016.
Latest Developments in Major Natural Gas and LNG Projects
- In early February 2021, the largest final investment decision (FID) on an LNG project in history was announced in Qatar. The decarbonization and net-zero movement is gaining momentum, as exemplified by greenhouse gas mitigation measures factored into the project, such as the use of CCS and the procurement of electricity for operations from renewable energy sources.
Asia and Oceania
- JERA announced on 10 February 2021 that JERA and Petronas had concluded a Memorandum of Understanding (MOU) on cooperation in the decarbonization sector. The companies will discuss opportunities to cooperate in promoting the use of LNG in Asian countries and in establishing supply chains for ammonia and hydrogen fuels.
- bp announced on 25 January 2021 that the company had begun to directly supply gas customers in China with gas from LNG that it had imported into the country. The company claimed that this was the first time that bp had created a fully integrated gas value chain into China. Under the agreement, bp has 600,000 tonnes a year tolling regasification capacity at the Guangdong Dapeng LNG terminal in which bp holds a 30% interest. bp in 2020 signed gas supply agreements with ENN Group and Foran Energy, and will supply each with 300,000 tonnes per year of pipeline gas, regasified from LNG, for two years from 2021.
- Petronas announced on 15 February 2021 that its second Floating Liquefied Natural Gas (FLNG) facility, PFLNG DUA, had achieved its first LNG production. The facility is currently located at the Rotan gas field, 140 km off Kota Kinabalu, Sabah. In collaboration with its upstream Production Sharing Contract partner, PTT Exploration and Production (PTTEP), PFLNG DUA is expected to deliver its first LNG cargo to customers by the middle of March 2021. PFLNG DUA is capable of reaching gas fields in water depths up to 1,500 metres and produces 1.5 million tonnes of LNG per year.
- Thailand's TTCL announced on 20 January 2021 that its Myanmar subsidiary had signed a power purchase agreement (PPA) with Electric Power Generation Enterprise, a state-owned enterprise under the Ministry of Electricity and Energy (MOEE) of Myanmar for a 388 MW LNG-to-power project in Ahlone Power Plant, Yangon Region. The project has been originally developed by TTCL and currently together with Sojitz, Shikoku Electric Power and INPEX. The power supply is set to start in 2024 and last until 2049. The project would become the first LNG power plant in Myanmar.
- Tokyo Gas Engineering Solutions announced on 29 January 2021 that the company and Nippon Koei had been awarded an order for Techno-Economic Feasibility Study, Engineering Services and Tender Management for selecting BOOT developer for a land-based LNG terminal in Matarbari, Cox's Bazar, Bangladesh from Petrobangla.
- Australia's federal government announced on 21 January 2021 a new Heads of Agreement with east coast LNG companies Australia Pacific LNG, Queensland Curtis LNG and GLNG that the government claims would help secure competitively priced gas supply for the east coast market at least until 2023. The government said that it was also continuing with its commitments to unlock new gas supplies and work progressing in the North Bowen and Galilee Basin.
- Australia's Woodside announced on 19 February 2021 that Woodside Energy Trading Singapore had entered into a sale and purchase agreement (SPA) with RWE Supply & Trading for 0.84 million tonnes per year of LNG from Woodside's global portfolio for a term of seven years commencing in 2025. Woodside said that the SPA also provided the opportunity for Woodside and RWE to explore the potential for carbon-neutral LNG production and trading. In October 2020, Woodside and RWE also signed a memorandum of understanding (MOU) to discuss mutually beneficial hydrogen-related opportunities.
- Australia's Transborders Energy announced on 27 January 2021 that it had signed a multi-party and multi-project FLNG Solution Framework Agreement for the deployment of Transborders' FLNG Solution on offshore gas resource opportunities with Add Energy Group; Kyushu Electric Power; Mitsui O.S.K. Lines (MOL); SBM Offshore; and TechnipFMC.
- According to data from the U.S. Department of Energy's (DOE) "LNG Annual Report - 2020", the United States exported nearly 50 million tonnes of LNG in 2020, 32% more than one year earlier.
- The Interstate Natural Gas Association of America (INGAA) announced on 26 January 2021 a set of climate change commitments that outline in detail its mission to help address climate change, including working together as an industry towards reaching net-zero greenhouse gas (GHG) emissions from natural gas transmission and storage by 2050.
- Sempra LNG's LA Storage on 29 January 2021 filed an application with the Federal Energy Regulatory Commission (FERC) seeking approval to construct a new salt cavern facility near Hackberry, Louisiana. Sempra requested FERC to approve the project no later than 31 January 2022. The project - which could enter operations in the first quarter of 2024 - involves the conversion of three existing salt dome caverns, currently filled with brine, and the development of one new salt dome cavern. Located near pipelines serving several LNG export facilities, the storage project is expected to enhance flexible gas supply and storage.
- Venture Global LNG announced on 11 February 2021 that it had closed a USD 500 million term loan with JPMorgan Chase, Morgan Stanley, Mizuho Bank, and Bank of America. The proceeds will be used to fund pre-FID construction activities at the company's Plaquemines LNG export project as well as for general corporate purposes.
Europe and Russia
- Fluxys LNG announced on 15 February 2021 that it had taken the final investment decision (FID) to build the additional infrastructure required at the Zeebrugge LNG terminal in Belgian. 4.7 million tonnes per year from early 2024 and 1.3 million tonnes per year from early 2026 of additional regasification capacity will be provided.
- Russia's NOVATEK announced on 29 January 2021 that the company and Uniper had signed a memorandum of understanding (MOU) to investigate and assess the possibilities of developing a hydrogen value chain. The two companies will develop an integrated hydrogen production, transportation and supply chain, including hydrogen supplies to Uniper's power stations in Russia and Western Europe.
- NOVATEK and Nuovo Pignone (Italy), part of the Baker Hughes Company, signed on 1 February 2021 a cooperation agreement aimed at reducing carbon dioxide (CO2) emissions. The parties intend to cooperate in developing electrical and gas turbine solutions for natural gas and LNG production, as well as solutions for reducing CO2 emissions. The parties will commence implementing a project to convert gas turbines to hydrogen-based fuel gas mix.
- Qatar Petroleum (QP) announced on 8 February 2021 the final investment decision for the North Field East Project (NFE), which will raise Qatar's LNG production capacity to 110 million tonnes per year. It is expected to start production in the fourth quarter of 2025. The project's key onshore engineering, procurement and construction (EPC) contract was signed with Chiyoda Corporation and Technip Energies. QP said that NFE's CO2 capture and sequestration (CCS) system will be integrated with the wider CCS scheme in Ras Laffan and is in the process of procuring power from the solar power plant currently under construction. A 'jetty boil-off gas' recovery system will help reduce greenhouse gas emissions (GHG) by approximately a further 1 million tonnes per year of CO2 equivalent. The next phase of expansion, referred to as the North Field South Project (NFS), will further increase Qatar's LNG production capacity to 126 million tonnes per year. With an expected production start date in 2027, the NFS project involves the construction of two additional mega LNG trains. QP is evaluating further LNG capacity expansions beyond 126 million tonnes per year.
- Equinor announced on 29 January 2021 that it had decided to write down the book value of its Tanzania LNG project on the company's balance sheet by USD 982 million in the fourth quarter 2020 results. Equinor will continue to engage with the Government of Tanzania in negotiations for the project in the future.
- Panama Canal Authority announced on 3 February that in January 2021 the Canal registered a new record of transits and tonnage of LNG vessels in 58 ships. In January 2021, changes were implemented in the Transit Reservation System so that any space that is available for neopanamax vessels within 96 hours before transit is offered through an auction process. Since the modifications, the Canal has held 25 auctions for neopanamax vessels, of which 9 have been awarded to LNG vessels.