Trend of Natural Gas and LNG Prices
- The assessed spot LNG price JKM for near-month delivery to Northeast Asia rose to USD 18 per million Btu at the end of August 2021, reached USD 20 in the early of September, temporarily exceeding USD 28 and then has been hovering around USD 26 toward the end of the month. The strong demand for LNG from Northeast Asia, particularly in China and Korea, as well as Europe, and high prices in Europe and LNG supply disruptions caused by the landfall of Hurricanes Ida and Nicolas in the United States have also contributed to the rise in the JKM price.
- JOGMEC announced in its monthly report of Japan's spot LNG prices that neither the average price of spot LNG cargoes for delivery to Japan contracted in August 2021 and scheduled to be delivered from the month onward (contract-based price) nor the average price of spot LNG cargoes contracted and delivered to Japan within the month of August 2021 (arrival-based price) are disclosed as only one or less company submitted the report in each of the categories for the month.
- The Henry Hub price has largely continued its upward trend, reaching USD 4 in late August, rising above USD 5 in early September, and hovering around USD 5 at the end of the month. According to the EIA (U.S. Energy Information Administration), the average price in August was the highest since 2010, citing that the rise in gas price is attributed to the increase of LNG exports, as well as increasing natural gas demand in the electric power sector due to the hot temperatures. Prices rose further in late August when Hurricane Ida caused a decline of more than 90% of natural gas production. As for the price outlook, EIA forecasts an average of USD 4.00 in the fourth quarter of 2021 and USD 3.47 for the entire year 2021. 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 17 at the end of August and exceeded USD 25 in late September, hovering around USD 24 towards the end of the month. European spot gas prices have been continuously more expensive than the Brent crude oil price since the last week of July, following similar experiences since the winter of 2005 and 2008, when Russian pipeline gas supply via Ukraine was disrupted. The main factors for the continued high price are considered to be the slow progress of gas injection into the region's underground storage, a decline of Russian pipeline gas supplies through Ukraine and increased supply uncertainty over delays in the commercial launch of the Nord Stream 2 pipeline. The carbon price in Europe that has been hovering around USD 70 makes coal-fired power generation less favorable, leading to higher gas prices.
- Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 10.12 in August 2021. The average landed prices of LNG in Japan from the United States, the ASEAN region, the Middle East and Russia in the month were USD 10.65, USD 9.96, USD 9.99 and USD 11.61, respectively. Other Asian countries’ average import prices in August were USD 10.55 in China, USD 10.31 in Korea, and USD 9.67 in Chinese Taipei. The Japan's average CIF oil import price (JCC: Japan crude cocktail) had increased from USD 42.28 per barrel in November 2020 to USD 73.76 in August 2021 due to the global rise in crude oil prices. Therefore, the Japan’s average LNG import price is expected to continue to rise, as long-term contracts linked to JCC prices still account for a majority of LNG imports.
- Japan imported 6.30 million tonnes of LNG in August 2021, 8% higher than the same month of 2020. The total import volume from January to August was 51.38 million tonnes, an increase of 6% from the same period of 2020. China imported 6.65 million tonnes of LNG, 13% more than the same month of 2020. The total LNG import volume from January to August was 51.81 million tonnes, an increase of 23% from the same period of the previous year, exceeding the total volume of Japan. While Korea imported 3.48 million tonnes, an increase of 78% from the same month of 2020, Chinese Taipei imported 1.72 million tonnes, 15% 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-August of 2021, the four markets imported 146.6 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 28 in September.
- 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, up to the low USD 9s in June, and rose to the high USD 9s in July. It then surpassed USD 10 in August for the first time in two years.
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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 May 2021 stood at 4.20 million tonnes, a decrease of 1.2% or 0.05 million tonnes from April, and a decrease of 17.6% from May 2020. The LNG inventories of 4.20 million tonnes were lower than the previous five-year average by 0.19 million tonnes, but still within the previous five-year range.
- The LNG inventories for city-gas supply as of the end of May were 1.71 million tonnes, 4.3% higher than April 2021. However, they were 26.3% lower than May 2020. LNG consumption for city-gas was 2.25 million tonnes, increasing by 27.7% year-on-year in May 2021. City-gas companies received 2.32 million tonnes of LNG in May, increasing year-on-year by 25.4%. The LNG inventories for city-gas have been lower by more than 10% year-on-year for nine consecutive months since September 2020, resulting in the lowest inventory level since 2018.
- The LNG inventories for power generation in May 2021 were 2.49 million tonnes, decreasing by 4.7% from April 2021 and 4.1% lower than May 2020. LNG consumption for power generation in May 2021 increased by 7.1% year-on-year to 2.79 million tonnes, while LNG receipts for power generation in the month increased by 6.4% year-on-year to 2.96 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 17 September 2021, working gas in underground natural gas storage in the United States was 3.08 Tcf, a 8.1% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 16.3% lower than those at the same time in 2020 and were 229 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 September 2021, natural gas inventories were 2.9 Tcf in August 2021, its largest year-on-year deficit (-584 Bcf) since November 2018, and 7.0% lower than the five-year (2016-2020) average. This is due to above-average withdrawals of natural gas from storage during the 2020–2021 winter heating season, while injections into storage have been below the previous five-year average during summer, mainly because of hot weather and high exports amid relatively flat natural gas production. EIA expects that the gas inventories will reach 3.6 Tcf by the end of October 2021, which would be 5% 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 23 September 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] and the United Kingdom member companies) was 807.3 TWh. The inventories were 12.0% up from the previous month and 23.0% lower year-on-year, and 158.7 TWh lower than the five-year average. The inventories represented 72.8% of the capacity, lower than 94.4% on the same day in 2020 and the five-year average of 83.9%. Notably, the inventories in the Germany and the Netherlands (which have relatively larger storage capacities) were low at 64.9% and 55.2% of the respective capacity. Excluding the two countries, the average inventory level in Europe was 78.6% of the capacity as of 23 September 2021, comparable to 80.2% and 79.5% at the similar time of 2017 and 2018.
- As of 23 September 2021, the stored volume of natural gas in Ukraine was 144.2 TWh. The inventories were 6.8% up from the previous month and 39.8% lower year-on-year, and 44.4 TWh lower than the five-year average. The inventories represented 45.3% of the capacity, lower than 74.2% on the same day in 2020 and the five-year average of 57.5%.
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 23 September 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 4.64 million cubic metres (in liquid), 14.6% up from the previous month. The inventories were lower than the same day in 2020 by 12.3% and 7.4% below the five-year average.
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
- There have been more initiatives to make LNG cleaner, including a plan of carbon capture utilization and storage (CCUS) at Indonesia's Tangguh LNG project and a potential plan of carbon capture and storage (CCS) at the Bayu-Undan project in the Timor Sea. There were more carbon-neutral LNG and carbon/GHG-offset LNG deal announcements.
Asia and Oceania
- bp Singapore announced on 6 September 2021 that it has delivered its carbon offset LNG cargo to CPC Corporation, Taiwan, to the Yung An terminal in September 2021 and was sourced from bp's LNG portfolio. This is bp's first delivery of carbon offset LNG in the Asia-Pacific region, following its first delivery globally to Sempra LNG at the Energía Costa Azul terminal in Mexico in July 2021.
- The shareholders of the Tangguh Production Sharing Contract Partners announced on 30 August 2021 that SKK Migas had approved the Plan of Development for Ubadari Field and Vorwata CCUS at the Tangguh LNG Project in Papua Barat, Indonesia. The Vorwata CCUS development will see 25 million tonnes of CO2 injected back to the Vorwata reservoir to eliminate carbon venting and provide incremental gas production through enhanced gas recovery (EGR). The CO2 injection will remove nearly half of the Tangguh LNG CO2 emissions. The FEED for Ubadari field development and Vorwata CCUS will start in the middle of 2022 with an estimated project start up in 2026 subsequent to a FID.
- Indonesia's Pertamina announced on 31 August 2021 that its affiliates as the operator of Arun LNG Receiving, Regasification, and Hub Terminal had signed a Terminal Use Agreement with TotalEnergies related to the utilization of the Arun LNG Hub in 2021. TotalEnergies plans to use the Arun LNG Hub to store its LNG volumes from international sources. The Arun Hub has four LNG tanks with a total capacity of 508,000 m3. The first shipment from Angola is expected in early September.
- INPEX CORPORATION announced on 13 September 2021 that it had made carbon neutral arrangements for a shipment of LNG from the Ichthys LNG project in Australia to be supplied to Toho Gas.
- Shizuoka Gas and INPEX announced on 1 September 2021 their carbon-neutral LNG transaction. The carbon footprint of the LNG shipment was offset by INPEX using carbon credits applied to greenhouse gas emissions across the entire natural gas supply chain including upstream production, liquefaction, transportation, regasification, marketing and combustion by customers in Japan.
- Santos as operator of the Bayu-Undan Joint Venture in the Timor Sea announced on 14 September 2021 that it had signed a MOU with the Timor-Leste regulator Autoridade Nacional do Petróleo e Minerais to progress CCS at Bayu-Undan in the Timor Sea. The Joint Venture and the ANPM will work on potentially repurposing the existing Bayu-Undan facilities and using the Bayu-Undan reservoir for CCS.
- Venture Global LNG and PGNiG (Polish Oil and Gas Company) announced on 2 September 2021 that they had finalized the LNG sales deal for an additional 2 million tonnes per year of LNG from Venture Global to PGNiG for 20 years. Cargoes will be supplied from Venture Global's Calcasieu Pass LNG and Plaquemines LNG export facilities.
- Mitsui O.S.K. Lines, Ltd. announced on 2 September 2021 that it had signed a Letter of Intent with "State Transport Leasing Company" (GTLK), a state owned leasing company under the Ministry of Transport of the Russian Federation, for the potential acquisition of total 49% shares of the FSU owner companies, which are currently 100% owned by GTLK, in relation to the LNG transshipment projects in Kamchatka and Murmansk. The above-mentioned FSU owner companies have entered into bareboat charter agreements with Arctic Transshipment LLC (joint venture of NOVATEK and TotalEnergies), that will provide transshipment services to NOVATEK's LNG projects by reloading LNG cargoes from ice-class LNG carriers to conventional LNG carriers. Two FSUs with a storage capacity of 360,000 m3 will be placed at each of Bechevinskaya Bay in the Kamchatka Territory and Ura Bay at Murmansk. The two FSUs are being constructed at Korea's Daewoo Shipbuilding & Marine Engineering Co., Ltd..
- Russia's NOVATEK announced on 8 September 2021 that its subsidiary Yamal LNG Resource had won the auctions for geological survey, exploration, and production licenses for two subsoil license areas, which includes the Arkticheskoye and Neytinskoye fields on the Yamal Peninsula in the Yamal-Nenets Autonomous Region. The fields have combined estimated hydrocarbon reserves of 2.9 billion barrels of oil equivalent (boe), including 413 Bcm of natural gas and 28 million tonnes of liquids, according to the Russian hydrocarbon classification system. The license terms are for 27 years.
- Russia's Gazprom announced on 9 September 2021 that RusKhimAlyans, Linde, and Renaissance Heavy Industries signed an EPC contract to build a natural gas liquefaction plant within the Gas Processing Complex near Ust-Luga. The consortium of Linde and Renaissance Heavy Industries is going to provide for the design works and supplies of equipment and materials, as well as to perform the construction and installation of two production trains with a total capacity of 13 million tonnes per year of LNG. A technology patented in Russia will be used to produce the LNG.
- Russia's Gazprom announced on 10 September 2021 that the construction of the Nord Stream 2 gas pipeline was fully completed. Germany's regulator Bundesnetzagentur said on 13 September that it would take four months to complete a certification of the Nord Stream 2 gas pipeline.
- Norway's Equinor announced on 30 August 2021 that on Friday 27 August, production started from the Troll phase 3 project in the North Sea. The new wells are tied into the Troll A platform and Troll phase 3 will extend the platform's life past 2050.
Supprted by the Institute of Energy Economics Japan (IEEJ)
- Japan Trend of LNG Inventory data(17.1KB) （Sep 24, 2021 update）
- US Trend of Natural Gas Inventory data(49.8KB) （Sep 24, 2021 update）
- Europe Trend of Natural Gas Inventory data(302.2KB) （Sep 24, 2021 update）
- Europe Trend of LNG Inventory data(188.0KB) （Sep 24, 2021 update）