Trend of Natural Gas and LNG Prices
- The assessed spot LNG price JKM for near-month delivery to Northeast Asia was above USD 15 per million Btu at the end of July 2021, reached USD 17 in the middle of August, fell to USD 15, and then has been hovering around USD 16 toward the end of the month. The strong demand from Northeast Asia, particularly China, as well as high prices around the world gas markets, have also contributed to the rise in the 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 July 2021 and scheduled to be delivered from the month onward (contract-based price) was USD 12.2 (USD 9.7 in June). The average price of spot LNG cargoes that were contracted and delivered in Japan within the month (arrival-based price) was USD 11.6 (not disclosed in June as only one or less company submitted the report for the month).
- The Henry Hub price has largely continued its upward trend, reaching USD 4 in late July, temporarily rising above USD 4.1 in early August, and hovering in the high USD 3 at the end of the month. According to the EIA (U.S. Energy Information Administration), the price is projected to be USD 3.71 in the third quarter of 2021 and USD 3.42 for the entire year 2021, much higher than 2020 average of USD 2.03. The price increase is attributed to the increase of LNG exports, as well as increasing domestic demand due to the resumption of economic activities.In the next few months. In 2022, natural gas production is expected to increase, and the average price is projected to be USD 3.08.
- The TTF reached USD 14 at the end of July and exceeded USD 16 in the middle of August, temporarily dropped to USD 13, and hovered around USD 15 towards the end of the month. The main factors for the continued high price in the summer season are considered to be the slow progress of gas injection into the region's underground storage, maintenance of the Norwegian gas field and concerns over pipeline gas supply from Russia.
- Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 9.69 in July 2021. The average landed prices of LNG in Japan from the ASEAN region, the United States, and Russia in the month were USD 9.53, USD 10.69, and USD 9.84, respectively, and the price from the Middle East was USD 9.53. Other Asian countries’ average import prices in July were USD 9.61 in China, USD 9.59 in Korea, and USD 9.17 in Chinese Taipei. The price of crude oil had been above USD 70 per barrel since June, but started to fall in August, and it is assumed that the lower crude oil price will be reflected in the Japan’s average LNG import price with a time lag.
- Japan imported 6.19 million tonnes of LNG in July 2021, 3% higher than the same month of 2020. The import volumes from January to July were 45.08 million tonnes, an increase of 6% from the same period of 2020. China imported 5.67 million tonnes of LNG, 14% more than the same month of 2020. While Korea imported 4.04 million tonnes, an increase of 71% from the same month of 2020, Chinese Taipei imported 1.62 million tonnes, 13% higher than one year earlier. Monthly LNG imports into the four markets combined have increased year-on-year since January 2020. In the period of January-July of 2021, the four markets imported 128.57 million tonnes, a 15% 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 the higher European prices and briefly increased over the USD 17s in August.
- 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 2021, fell to the mid-USD 7s in March, rose to the low USD 8 in May, and up to the low USD 9s in June. It then reached the high USD 9s in July.
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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 April 2021 stood at 4.25 million tonnes, a decrease of 4.0% or 0.18 million tonnes from March, and a decrease of 10.3% from April 2020, but still above the five-year average for the third month in a row. In terms of LNG inventories for power generation, LNG receipts had been higher than the same period of 2020 since December 2020, but in April, decreased by 36.4% month-on-month. In addition, the LNG inventories for city-gas have been decreasing by double-digit rates year-on-year for eight consecutive months since September 2020, resulting in the lowest inventory level since 2018.
- The LNG inventories for city-gas supply as of the end of April were 1.64 million tonnes, 14.8% higher than March 2021 and decreased by 26.6% from April 2020. LNG consumption for city-gas was 2.35 million tonnes, increasing by 3.4% year-on-year in April 2021. City-gas companies received 2.56 million tonnes of LNG in April, increasing year-on-year by 13.1%.
- The LNG inventories for power generation in April 2021 were 2.62 million tonnes, decreasing by 13.0% from March 2021 and 4.1% higher than April 2020. LNG consumption in April 2021 increased by 4.2% year-on-year to 2.98 million tonnes, while LNG receipts for power generation in the month decreased by 11.7% year-on-year to 2.90 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 13August 2021, working gas in underground natural gas storage in the United States was 2.82 Tcf, a 5.4% increase from the previous month, according to the EIA. Gas inventories were 16.4% lower than those at the same time in 2020 and were 174 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 August 2021, natural gas inventories were 2.8 Tcf in July 2021, which was 6% lower than the five-year (2016-2020) average.More natural gas was withdrawn from storage during the winter of 2020-2021 than the previous five-year average, mainly because of exceptionally cold February with constrained natural gas production. EIA expects that the gas inventories will reach 3.6 Tcf by the end of October 2021, which would be 4% lower than the previous five-year average for the end of October.
Compiled based on data from the U.S. Energy Information Administration (EIA)
- As of 18 August 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 was 694 TWh. The inventories were 21.2% up from the previous month and 30.1% lower year-on-year, and 177.4 TWh lower than the five-year average. The inventories represented 62.4% of the capacity, lower than 89.5% on the same day in 2020 and the five-year average of 73.1%.
- As of 18 August 2021, the stored volume of natural gas in Ukraine was 133 TWh. The inventories were 7.6% up from the previous month and 47.5% lower year-on-year, and 38.8 TWh lower than the five-year average. The inventories represented 41.9% of the capacity, lower than 78.7% on the same day in 2020 and the five-year average of 52.5%.
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 18 August 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 3.93 million cubic metres (in liquid), 2.7% down from the previous month. The inventories were lower than the same day in 2020 by 18.6% and 10.8% below the five-year average. Notably, the LNG inventories in Europe had been below the five-year minimum since 9 August until they increased to a level of 3.2% more than the five-year minimum on 18 August. Notable reductions of inventories were observed in Spain and France during the nine-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
- Multiple LNG offtake contracts and preliminary agreements of 8 million tonnes of LNG from several LNG production projects in the United States were announced. In the Oceania region, there were announcements of a merger of gas and oil producers, integration of gas and oil assets, and progress of engineering works at an LNG production project.
Asia and Oceania
- Mitsui O.S.K. Lines, Ltd. announced on 17 August 2021 that the company and Korea's Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME) had carried out the demonstration test of the "Cryo-Powered Regas" System for FSRU at DSME's Okpo shipyard. In the past, LNG's cryogenic energy had not been utilized in FSRUs and was released. By installing the system, such cold energy will be transferred to another heating medium, and the generated steam will be sent to a turbine to generate electricity, which results in reducing FSRU's fuel consumption and CO2 emissions.
- Malaysia's PETRONAS announced on 18 August 2021 that it had completed the delivery of its maiden carbon neutral LNG cargo from the PETRONAS LNG Complex (PLC) in Bintulu to Japan's Shikoku Electric Power at Sakaide LNG terminal on 17 August. PETRONAS has offset the estimated life cycle carbon footprint of the LNG cargo through renewables-based carbon credits certified through a verification process under the Verified Carbon Standard program for the emissions generated from upstream gas explorationand shipping of the cargo. PETRONAS is also reducing its carbon footprint throughout its LNG and gas value chain including powering the PLC with 90 MW of hydroelectricity, conducting flare recovery as well as carbon capture and storage from offshore gas fields.
- Eni announced on 6 August 2021 that the company and CPC Corporation, Taiwan, reached an agreement for the delivery by Eni of a carbon neutral LNG cargo from the Bontang LNG plant in Indonesia to CPC at the Yung An receiving terminal. The credits to be used to offset the GHG emissions have been sourced from forest and environment improvement projectsin Zambia and Malawi. The GHG emissions of the LNG cargo will be calculated using Eni's proprietary methodology.
- Woodside announced on 4 August 2021 that the company had finalised technical work to support execution readiness and completed an update of the capital expenditure requirements for the Scarborough development. The updated cost estimate is USD 12.0 billion (100% project, nominal), 5% higher than the previous cost estimates announced in November 2019, with USD 5.7 billion for the offshore component and USD 6.3 billion for the onshore component. The integrated Scarborough and Pluto Train 2 development is targeted to deliver the first cargo in 2026.
- Woodside and BHP announced on 17 August 2021 that they had entered into a merger commitment deed to combine their respective gas and oil portfolios. The proposed merger would create the largest energy company listed on the ASX, with a global top 10 position in the LNG industry by production.
- Australia's Santos announced on 2 August 2021 that the company and Oil Search had reached agreement on the merger ratio under the proposed merger and additional terms. Oil Search shareholders will own approximately 38.5% of the merged group.
- INPEX said on 11 August 2021 that at its Abadi LNG Project in Indonesia detailed survey work at and around the planned plant construction site had been suspended due to the spread of COVID‐19. The company also said that it had plans to consider ways to realize the project in line with the changing external environment through initiatives including introduction of CCS/CCUS.
- Cheniere said on 5 August 2021 that Train 6 at Sabine Pass would come online in 2022. The train was 90% complete and began early commissioning activities in July 2021. Cheniere expects to reach a final investment decision (FID) on the proposed Stage 3 expansion at Corpus Christi LNG in 2022.
- Cheniere announced on 5 August 2021 the publication of an LNG life cycle assessment (LCA) study which allows for improved GHG emissions assessment. The analysis utilizes GHG emissions data specific to Cheniere's LNG supply chain from natural gas production through LNG shipping. The use of supply chain specific data provides an improved methodology for GHG emissions accounting and estimates a 30%-43% lower GHG intensity for Cheniere's LNG relative thanother studies utilizing generic national or regional data to assess U.S. LNG emissions. The Cheniere LCA is intended to be the foundational analytical tool to estimate GHG emissions to be included in Cheniere's Cargo Emissions Tags (CE Tags).
- Tellurian announced on 29 July 2021 that it had finalized SPAs with Shell. The SPAs are on a FOB basis at Driftwood LNG for a combination of 3 million tonnes per year for a 10-year period, indexed to a combination of JKM and TTF, each netted back for transportation charges. The agreements mark the third deal that Tellurian has finalized in ten weeks, for a total of 9 million tonnes per year and nearly all of the capacity of Driftwood LNG's first two plants.
- PGNiG (Polish Oil and Gas Company) announced on 27 July 2021 that it had signed agreements with Venture Global Calcasieu Pass, LLC and Venture Global Plaquemines, LLC to purchase another 2 million tonnes per year of LNG for 20 years. As a result, the volume of LNG contracted from Venture Global LNG by PGNiG is to increase to 5.5 million tonnes per year - 1.5 from the under-construction Calcasieu Pass facility and 4 from the planned Plaquemines project, respectively, on an FOB basis. The first delivery from Calcasieu Pass is expected in early 2023.
- PGNiG and Sempra announced on 27 July 2021 that they had terminated the SPA that provided for 2 million tonnes per year of LNG supply from the Port Arthur LNG project, due to delays in the project's development. The two companies signed an MOU for a potential replacement of approximately 2 million tonnes per year of LNG from other Sempra LNG's portfolio of projects in North America.
- Summit Oil and Shipping Co. Ltd. (SOSCL) announced on 2 August 2021 that it had signed a MOU with Commonwealth LNG to collaborate in the supply of LNG to Asia, including Bangladesh. The scope of the MOU includes SOSCL potentially contracting for 1 million tonnes per year of LNG offtake, for a term of up to 20 years, from Commonwealth's 8.4 million tonnes per year facility under development in Cameron, Louisiana.
- Canada's Irving Oil announced on 3 August 2021 the divestiture of its 25% ownership interest in Canaport LNG, with full ownership to be assumed by Repsol.
- Sempra said in its Q2 2021 Earnings Call on 5 August 2021 that the Energía Costa Azul (ECA) LNG export project is expected to come into the company's planning period in the second half of 2024.
- New Fortress Energy announced on 11 August 2021 that it had executed two Gas Supply Agreements with Unigel Participações to supply natural gas to the Unigel Agro-BA and Unigel Agro-SE fertilizer plants in the Brazilian states of Bahia and Sergipe, respectively. NFE expects to supply Unigel with up to 41 Tbtu of natural gas per year (0.8 million tonnes of LNG equivalent) for a 5-year term beginning in Q1 2022.
Supprted by the Institute of Energy Economics Japan (IEEJ)
- Japan Trend of LNG Inventory data(17.0KB) （Aug 20, 2021 update）
- US Trend of Natural Gas Inventory data(49.7KB) （Aug 20, 2021 update）
- Europe Trend of Natural Gas Inventory data(299.2KB) （Aug 20, 2021 update）
- Europe Trend of LNG Inventory data(186.0KB) （Aug 20, 2021 update）