Trend of Natural Gas and LNG Prices
- The assessed spot LNG price JKM for near-month delivery to Northeast Asia was above USD 13 per million Btu at the end of June 2021, reached USD 14 at the beginning of July, and has been hovering between USD 13 and high USD 14 before moving towards USD 15 at the end of July. Expected strong demand from August onwards, particularly from China and Korea, as well as high prices in the European gas market, has also contributed to the rise in JKM price.
- JOGMEC announced in its monthly report of spot LNG prices for delivery to Japan that the average price of spot LNG cargoes for delivery to Japan contracted in June 2021 and scheduled to be delivered from the month onward (contract-based price) was USD 9.7 (same as that of May). The average price of spot LNG cargoes that were contracted and delivered in Japan within the month (arrival-based price) was not disclosed because the number of companies that imported spot LNG in such a manner was one or less.
- The Henry Hub price has continued its upward trend, moving from the mid-USD 3s to above USD 4 in late July 2021. According to the EIA (U.S. Energy Information Administration), the main factors of the rises in spot gas prices are increasing natural gas exports to Mexico and LNG exports, as well as increasing domestic demand due to the resumption of economic activities and record heat waves, while domestic gas production has remained flat.In the future, the EIA also predicts that the fuel for thermal power generation will be switched to coal due to the rise in natural gas prices, and the amount of natural gas used will be suppressed.
- The TTF reached USD 12 at the end of June and briefly exceeded USD 13 at the beginning of July, but then hovered around USD 12 before rising to USD 13 towards the end of July. The continuing slow progress of gas injection into underground storage towards the winter in Europe and concerns over decrease in imports from Norwegian gas fields due to maintenance, reduced levels of pipeline gas supply from Russia and other possible supply distractions, a strong carbon market, and South American LNG demand provided support for the high price.
- Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 9.06 in June 2021. The average landed prices of LNG in Japan from the ASEAN region, the United States, and Russia in the month were USD 8.71, USD 9.85, and USD 8.71, respectively, and the price from the Middle East was USD 8.81. Other Asian countries’ average import prices in June were USD 8.64 in China, USD 8.87 in Korea, and USD 8.09 in Chinese Taipei. As the price of crude oil hovering above USD 70 per barrel since June, the Japan’s average LNG import price is expected to rise in the future, as long-term contracts linked to crude oil prices still represent a majority of LNG imports.
- Japan imported 5.71 million tonnes of LNG in June 2021, 8% higher than the same month of 2020. The import volumes in the first half-year were 38.89 million tonnes, an increase of 7% from the same period of 2020. China imported 6.72 million tonnes of LNG in June 2021, 16.5% more than the same month of 2020, exceeding Japan's imports volumes for two months in a row. While Korea imported 3.15 million tonnes, an increase of 22% from the same month of 2020, Chinese Taipei imported 1.64 million tonnes, 2% higher than one year earlier. Monthly LNG imports into the four markets combined have increased year-on-year since January 2020. During the first half of 2021, the four markets imported 111.26 million tonnes, a 14% increase year-on-year.
Mid- to long-term trend
- The JKM price started to decline from January 2020, reaching an all-time low of USD 1.83 at the end of April 2020 due to increasing supply and slower growth of demand. 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. JKM then fell sharply to the USD 5s towards the end of February, turning upwards in March, and continued rising to the high USD 10s in early June, moving along with European indices and increased over the USD 14 later in July.
- 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 from March 2020. Then the average price rose to the USD 7s in December 2020 as crude oil prices recovered. In response to strong crude oil price movements, the average price further went up to the USD 9 in February, fell to the mid-USD 7s in March, and rose to the low USD 8 in May. It then reached the low USD 9s in June.
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Henry Hub price: NYMEX Futures and Options, CME Group
TTF price: ICE Endex, Intercontinental Exchange
JKM: LNG Japan/Korea Marker© 2021 by S&P Global Platts, a division of S&P Global Inc.
JOGMEC spot LNG price: Monthly spot LNG prices for delivery to Japan, JOGMEC; by March 2021, the source is Spot LNG Prices Statistics, Ministry of Economy, Trade and Industry
Japan’s average LNG import price: Trade Statistics of Japan
EUA(EU ETS): ICE Endex, Intercontinental Exchange
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Trend of Natural Gas and LNG Inventories
- Japan's LNG inventories as of the end of March 2021 stood at 4.43 million tonnes, an increase of 8.5% or 0.35 million tonnes from February, and a decrease of 6.4% from March 2020. LNG inventories were above the five-year average for the second month in a row and are trending upward. The LNG inventories for power generation reached 3 million tonnes for the first time in the history of statistics. However, the LNG inventories for city-gas reached a low level as the LNG consumption exceeded the received volume.
- The LNG inventories for city-gas supply as of the end of March were 1.42 million tonnes, 6.2% lower than February 2021. They also decreased by 38.1% from March 2020. LNG consumption for city-gas was 2.82 million tonnes, decreasing by 2.7% year-on-year in March 2021. City-gas companies received 2.72 million tonnes of LNG in March, decreasing year-on-year by 17.7%.
- The LNG inventories for power generation in March 2021 were 3.00 million tonnes, increasing by 17.3% from February 2021 and 23.6% higher than March 2020. LNG consumption in March 2021 decreased by 1.2% year-on-year to 3.71 million tonnes, while LNG receipts for power generation in the month increased by 14.7% year-on-year to 4.56 million tonnes.
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 16 July 2021, working gas in underground natural gas storage in the United States was 2.68 Tcf, a 7.9% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 16.7% lower than those at the same time in 2020 and were 176 Bcf lower than the past five-year average. The latest inventories have been within the past five-year range since November 2020.
- According to the monthly Short-Term Energy Outlook (STEO) released by the EIA in July 2021, natural gas inventories were 1.8 Tcf in March 2021 at the end of the winter withdrawal season, which was 2.0% lower than the five-year (2016-2020) average.For the 2021 April–October storage injection season, EIA forecasts that injections will be 5% below the five-year average rate due to the United States’ record-high exports amid flat natural gas production in the summer. EIA expects that the gas inventories will reach more than 3.6 Tcf at the end of October 2021, which would be 3% lower than the previous five-year average for the end of October and 8% lower than at the end of October 2020.
Compiled based on data from the U.S. Energy Information Administration (EIA)
- As of 24 July 2021, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) member companies of the European Union (EU) and the United Kingdom member companies) was 604 TWh. The inventories were 19.4% up from the previous month and 35.3% lower year-on-year, and 170.5 TWh lower than the five-year average. The inventories represented 54.3% of the capacity, lower than 84.2% on the same day in 2020 and the five-year average of 67.4%.
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.
- As of 24 July 2021, the stored volume of LNG in European LNG terminals reported by Aggregated LNG Storage Inventory (ALSI) member operators (including 18 operators in 11 countries) was 3.77 million cubic metres (in liquid), 12.5% down from the previous month. The inventories were lower than the same day in 2020 by 21.7% and 18.7% below the five-year average. Notably, the LNG inventories in Europe had been below the five-year minimum since 17 July until they were 9.0% less than the five-year minimum on 24 July. Notable reductions of inventories were observed in Spain and France during the seven-day period.
Compiled based on data from Gas Infrastructure Europe, Aggregated LNG Storage Inventory(ALSI). As the inventory data is available for the period only after January 2012, the five-year average is applicable only after January 2017.
Latest Developments in Major Natural Gas and LNG Projects
- Numerous LNG term sales deals were announced, including those sales to Northeast Asia, including China, Korea, and Chinese Taipei, with the majority of the supply coming from Qatar, followed by major suppliers with existing capacities such as Malaysia's Petronas, bp, and Shell. In addition, there were also announcements on carbon-offset LNG cargo and term deals, delivering volumes not only to Asia but also to markets in Europe and North America.
Asia and Oceania
- Osaka Gas announced on 6 July 2021 that it had received a cargo of carbon neutral LNG (CNLNG) at its Senboku terminal delivered from Brunei under a contract with Shell.
- INPEX CORPORATION announced on 10 July 2021 that it had made arrangements to offtake CNLNG from the Ichthys LNG Project and received the shipment of CNLNGat its Naoetsu LNG Terminal. The credits were applied to greenhouse gas emissions across the project's entire natural gas supply chain including from upstream production to combustion by customers in Japan. The carbon credits used to offset the shipment's carbon footprint meet the Verified Carbon Standard (VCS).
- Saibu Gas received the first large-scale cargo of LNG from Novatek's Yamal LNG Project in Russia with an ice-class LNG tanker at the Hibiki terminal on 18 July 2021, Saibu Gas announced on the following day. The LNG is for reload/transshipment business for overseas customers.
- Korea's Ministry of Trade, Industry and Energy (MOTIE) announced on 12 July 2021 that Kogas and Qatar Petroleum (QP) had signed an LNG sales and purchase contract (SPA) for 2 million tonnes per year of LNG for 20 years from 2025.
- QP announced on 7 July 2021 that it had concluded a 15-year SPA with CPC Corporation, Taiwan, for 1.25 million tonnes per year of LNG commencing in January 2022.
- Shell announced on 12 July 2021 that Shell and PetroChina had signed the industry’s first term sales agreement for CNLNG - for five years. PetroChina on the day received its first CNLNG cargo at Dalian port of China.
- China's Guangzhou Gas and bp announced on 9 July 2021 that it had signed an SPA for 0.65 million tonnes per year of LNG starting in 2022 through 2034.
- Malaysia's PETRONAS announced on 7 July 2021 that PETRONAS LNG Limited (PLL) had secured a 2.2 million tonnes per year, 10-year term deal to supply LNG to CNOOC Gas and Power Trading & Marketing Limited, a subsidiary of CNOOC. The agreement includes supply from LNG Canada when the facility commences its operations by middle of the decade. The deal is indexed to a combination of the Brent and AECO indices.
- New Fortress Energy announced on 8 July 2021 that it had signed a Framework Agreement with the Government of Sri Lanka to construct a new offshore LNG receiving, storage and regasification terminal. The terminal will be located off the coast of Colombo to supply gas to the country's power plants, primarily located in the Kerawalapitiya Power Complex. The complex consists of 300 MW in operation and is expected to grow to over 1,000 MW by 2025. The terminal will introduce natural gas to the country for the first time and is expected to begin operations by the second half of 2022.
- Chevron Australia announced on 19 July 2021 that it was poised to reach a milestone at its Gorgon LNG facility, injecting five million tonnes of greenhouse gas (carbon dioxide equivalent, CO2e) since safely starting the system in August 2019. Once fully operational, the system will capture up to 4 million tonnes of CO2 annually and reduce greenhouse gas emissions by more than 100 million tonnes over the life of the injection project. Yet Chevron said it had not met injection requirements as it had taken more time to safely start the system.
- Cheniere Energy announced on 15 July 2021 that its subsidiary, Corpus Christi Liquefaction Stage III, LLC had entered into a long-term gas supply agreement (GSA) with Tourmaline Oil Corporation, the largest natural gas producer in Canada. Tourmaline has agreed to sell 140,000 million Btu per day of natural gas to Corpus Christi Stage III for a term of 15 years beginning in early 2023. The LNG associated with this gas supply, approximately 0.85 million tonnes per year, will be marketed by Cheniere. Cheniere will pay Tourmaline an LNG-linked price for its gas, based on the Platts Japan Korea Marker (JKM), after deductions for fixed LNG shipping costs and a fixed liquefaction fee.
- Sempra revealed during its investor day presentation on 30 June 2021 that the company would develop a 6 million tonne per year train at its Cameron LNG export facility in Louisiana, instead of two trains with 9.97 million tonnes per year capacity. A final investment decision (FID) could be made by the end of 2022. The company also revealed that it and Saudi Aramco agreed to cease their 2019 agreements to negotiate transferring a 25% stake in the Port Arthur project and a potential offtake deal.
- The Nisga'a Nation, Rockies LNG and Western LNG announced on 19 July 2021 the filing of the Initial Project Description for the Ksi Lisims LNG project with the Government of British Columbia and the Government of Canada. Ksi Lisims LNG is a proposed 12-million-tonne-per-year LNG project at Wil Milit on the northern tip of Pearse Island near the Nisga'a village of Gingolx.
- Pieridae Energy announced on 2 July 2021 that the company failed to meet all of the key conditions necessary by 30 June to make an FID on the Goldboro LNG Project. Hence the company had made the decision to move Goldboro LNG in a new direction. The company will assess options and analyse strategic alternatives that could make an LNG project more compatible with the current environment. In addition, the company will continue its work to further optimize the operation and development of its Foothills resources and midstream assets, including the carbon capture and sequestration and blue power development.
- bp and Sempra announced on 16 July 2021 that they had entered a contract for the delivery and receipt of the companies' first carbon offset LNG cargo. The cargo was delivered to the Energía Costa Azul terminal in Mexico on 16 July and it was sourced from bp's global LNG portfolio. These estimated emissions will be offset by retiring a corresponding amount of carbon credits, sourced from a Mexican afforestation project from bp's portfolio of offsets on behalf of Sempra LNG.
Europe and Russia
- The Netherlands' Gate LNG terminal announced on 30 June 2021 that the terminal's first CNLNG arrived in May brought by TotalEnergies and OMV.
- QP announced on 30 June 2021 a long-term SPA with Shell for the supply of 1 million tonnes per year of LNG to China for ten years. LNG deliveries will commence in January 2022 to multiple terminals in China. QP plans to supply the volumes from its Qatargas 1 venture, which will become 100% owned by QP as of January 2022. With the agreement, China would be supplied with approximately 12 million tonnes per year of LNG under long term SPAs from Qatar, QP said.
- QP announced on 23 June that it had received offers for double the equity available to potential partners in the bidding process for the North Field East project. QP also noted that it had received offtake commitments/ sales and purchase agreements for double the 32 million tonnes per year volume on offer. QP also said that it started decarbonizing its LNG a while ago and that it currently captures and sequesters two million tonnes per year of CO2, which will grow to 9 million tonnes by 2030.
Supprted by the Institute of Energy Economics Japan (IEEJ)
- Japan Trend of LNG Inventory data(17.0KB) （Jul 27, 2021 update）
- US Trend of Natural Gas Inventory data(49.1KB) （Jul 27, 2021 update）
- Europe Trend of Natural Gas Inventory data(295.3KB) （Jul 27, 2021 update）
- Europe Trend of LNG Inventory data(183.6KB) （Jul 27, 2021 update）