Trend of Natural Gas and LNG Prices
- The assessed spot LNG price JKM for near-month delivery to Northeast Asia rose to USD 30 per million Btu at the end of September 2021, temporarily spiked to USD 56 in the early of October but fell to USD 35 on the next day, and then has remained below USD 35 toward the end of the month. The strong demand for LNG from Northeast Asia and Europe for the winter season, combined with the shortage of electricity derived from renewable energy sources in Europe and Russian gas pipeline concerns, has pushed up European gas prices, which has been a main factor in the JKM price surge.
- 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 September 2021 and scheduled to be delivered from the month onward (contract-based price) was USD 21.6. The average price of spot LNG cargoes that were contracted and delivered in Japan within the month (arrival-based price) was not disclosed as only one or less company submitted the report for the month.
- The Henry Hub Natural Gas Futures price has largely continued its upward trend, reaching USD 5.8 in late September, rising above USD 6.3 in early October, and hovering around USD 5 at the end of the month. According to the EIA (U.S. Energy Information Administration), the main factors behind the price increase are the increase of LNG exports, which a monthly record high in September since the start of exports in February 2016, the production volume that will remain relatively flat until January 2022, low gas inventories in Europe and the United States and an increase in seasonal demand over the coming months. As for the price outlook, EIA forecasts an average of USD 5.80 (USD 4.00 in previous month) in the fourth quarter of 2021 and USD 4.01 (USD 3.47 in previous month) for the entire year 2021. EIA expects 22% more U.S. coal-fired generation in 2021 than in 2020, due to a significantly higher gas prices and relatively stable coal prices, and the first year-over-year increase in coal-fired power generation since 2014.
- The TTF reached USD 32 at the end of September and exceeded temporarily USD 38 in early October (it briefly spiked to USD 54 during the same day, and JKM followed to reach a new record high of USD 56.), hovering around USD 30 towards the end of the month, which is about five times as high as the price in March. The main factors for the continued high prices include the expected arrival of colder weather in Europe leading to higher demand, the lower-than-expected wind power performances in the United Kingdom and other countries raising concerns about power shortages. In addition, the slow progress of gas injection into the region's underground storage, a high carbon price in Europe, a decline of Russian pipeline gas supplies through Ukraine and uncertainty over operations of the Nord Stream 2 pipeline which was completed in September but could take several more months to obtain certificates for commercial operation by German and the European Union regulators.
- Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 10.75 in September 2021, the lowest in the Northeast Asia region. 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 11.19, USD 10.81, USD 10.45, and USD 11.38, respectively. Other Asian countries’ average import prices in August were USD 11.61 in China, USD 11.00 in Korea, and USD 11.13 in Chinese Taipei. The Japan's average landed crude oil import price (JCC: Japan crude cocktail) increased from USD 42.28 per barrel in November 2020 to USD 73.82 in September 2021, the highest in three years, 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 5.41 million tonnes of LNG in September 2021, 17% lower than the same month of 2020. The total import volume from January to September was 56.79 million tonnes, an increase of 4% from the same period of 2020. China imported 6.75 million tonnes of LNG in September 2021, 19% more than the same month of 2020. The total LNG import volume from January to September was 58.48 million tonnes, an increase of 23% from the same period of the previous year, exceeding the total volume of Japan. While Korea imported 3.72 million tonnes, an increase of 27% from the same month of 2020, Chinese Taipei imported 1.75 million tonnes, 8% 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-September of 2021, the four markets imported 164.15 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 the also high European gas prices and briefly increased over the USD 56 in October.
- 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, after falling to the mid-USD 7s in March. It has then recovered as crude oil prices have risen, surpassing USD 10 in August, and then climbing to the high USD 10s in September for the first time in two and a half 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 June 2021 stood at 4.55 million tonnes, an increase of 8.3% or 0.35 million tonnes from May, and a decrease of 7.3% from June 2020. The LNG inventories of 4.55 million tonnes were higher than the past five-year average by 0.35 million tonnes, but still within the past five-year range.
- The LNG inventories for city-gas supply as of the end of June were 1.88 million tonnes, 10.5% higher than May 2021. However, they were 13.4% lower than June 2020. LNG consumption for city-gas was 2.22 million tonnes, increasing by 2.5% year-on-year in June 2021. City-gas companies received 2.40 million tonnes of LNG in June, increasing year-on-year by 18.6%. The LNG inventories for city-gas have been lower by more than 10% year-on-year for ten consecutive months since September 2020, resulting in the lowest inventory level since 2018.
- The LNG inventories for power generation in June 2021 were 2.66 million tonnes, increasing by 6.7% from May 2021 and 2.4% lower than June 2020. LNG consumption for power generation in June 2021 increased by 0.8% year-on-year to 3.33 million tonnes, while LNG receipts for power generation in the month increased by 4.3% year-on-year to 3.65 million tonnes.
- According to information presented at a meeting between companies and the METI on fuel procurement issues held on 21 October 2021, inventories of LNG held by electric power companies as of the middle of the month stood at the highest level in the last five years at the time of the year, and higher by around 700,000 tonnes than those of the same timing of 2020.
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 15 October 2021, working gas in underground natural gas storage in the United States was 3.46 Tcf, a 12.3% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 11.8% lower than those at the same time in 2020 and were 151 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 October 2021, natural gas inventories were 3.3 Tcf in September 2021, its largest year-on-year deficit (-584 Bcf) since November 2018, and 5.0% lower than the five-year (2016-2020) average. The injections into storage have been below the previous five-year average during summer, mainly because of hot weather and high levels of 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 at the end of October. EIA also forecasts that the gas inventories will fall by 2.1 Tcf during 2021-2022 winter, ending March 2022 at less than 1.5 Tcf, which would be 12% less than the previous five-year average.
Compiled based on data from the U.S. Energy Information Administration (EIA)
- As of 20 October 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 855.4 TWh. As the injection season came closer to the end, the inventories were 7.0% up from the previous month and 18.9% lower year-on-year, and 147.0 TWh lower than the five-year average. The inventories represented 77.4% of the capacity, lower than 94.6% on the same day in 2020 and the five-year average of 88.3%. Notably, the inventories in the Germany and the Netherlands (which have relatively larger storage capacities) were low at 71.0% and 61.5% of the respective capacity. Excluding the two countries, the average inventory level in Europe was 82.5% of the capacity as of 20 October 2021, comparable to 84.8% at the similar time of 2017 and 2018.
- As of 20 October 2021, the stored volume of natural gas in Ukraine was 142.9 TWh. The inventories were 0.4% down from the previous month and 39.8% lower year-on-year, and 56.3 TWh lower than the five-year average. The inventories represented 44.9% of the capacity, lower than 77.3% on the same day in 2020 and the five-year average of 60.8%.
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 20 October 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 5.89 million cubic metres (in liquid), 34.3% up from the previous month. The inventories were higher than the same day in 2020 by 36.3% and 12.2% above 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
- The world traded 277 million tonnes of LNG during the first nine months of 2021, an increase of 4.6% or 12 million tonnes from the same period in 2020. Among importing countries, China increased its LNG import by around 11 million tonnes. The United States increased its LNG export by 60% or 19 million tonnes to reach nearly 50 million tonnes, compared to 58 million tonnes each from Australia and Qatar. On the project investment front, the Mozambique onshore liquefaction project operator confirmed a construction delay. The LNG Canada project announced progress on construction activities with still some concern over possible delay of the pipeline to supply gas to the liquefaction plant.
Asia and Oceania
- Russia's Sakhalin Energy announced on 28 September 2021 that the company and Toho Gas (Japan) had agreed on the delivery of the first carbon neutral/offset LNG cargo from the Sakhalin-2 project to Toho Gas.
- Japan Petroleum Exploration Co., Ltd. (JAPEX) announced that the company received its first carbon-neutral LNG cargo at Soma LNG Terminal on 7 October 2021. The cargo was purchased from Diamond Gas International subsidiary of Mitsubishi Corporation. JAPEX plans to sell the LNG to six companies, including city gas companies.
- INPEX Corporation and Kyushu Electric Power Company announced on 19 October 2021 that the two companies and Thailand's PTT subsidiary PTT International Trading Pte Ltd had signed an LNG business cooperation agreement.
- bp announced on 20 October 2021 that it had signed a gas sales and purchase agreement with Shenzhen Sino-Benny LPG Co Ltd, the first long-term deal with price indexed to international LNG in China's domestic gas market. From 2023, bp will provide Sino-Benny, a subsidiary of Shenzhen Gas Group, with up to 300,000 tonnes of pipeline gas per year. The gas will be supplied through the Guangdong Dapeng LNG terminal.
- Cheniere Energy announced on 11 October 2021 that Cheniere Marketing, LLC had entered into an LNG sale and purchase agreement (SPA) with ENN LNG (Singapore) subsidiary of ENN Natural Gas Co., Ltd. ENN LNG has agreed to purchase approximately 0.9 million tonnes per year of LNG from Cheniere Marketing on a free-on-board (FOB) basis for 13 years from July 2022. The purchase price is indexed to the Henry Hub price, plus a fixed liquefaction fee.
- JERA announced on 27 September 2021 that it had decided to acquire approximately 27% of the outstanding shares of Aboitiz Power Corporation, a major power utility in the Philippines, and executed a share purchase agreement with its holding company. JERA and Aboitiz Power are exploring areas of collaboration including the potential joint development of power projects (including LNG-to-Power), and collaboration on new generation technologies. JERA has also signed a MOU with Aboitiz Power to collaborate in fuel sourcing and management of LNG.
- Petronas announced on 29 September 2021 that a fire broke out at the PETRONAS LNG Complex (PLC) in Bintulu on 28 September 2021 at approximately 4.15 p.m.
- Australia's Beach Energy announced on 27 September 2021 that it had entered into a Heads of Agreement (HOA) with bp to purchase all 3.75 million tonnes of Beach's expected LNG volumes from the Waitsia Gas Project Stage 2, with supply forecast to commence in H2 2023.
- Santos announced that it would commence the process to apply to register the Moomba CCS Project with the Clean Energy Regulator and generate Australian Carbon Credit Units (ACCUs). The project will store 1.7 million tonnes per year of carbon dioxide in the same reservoirs that held oil and gas.
- The Federal Energy Regulatory Commission (FERC) issued on 21 October 2021 orders to approve increases of liquefaction capacity at its Sabine Pass and Corpus Christi LNG plants - resulting in an increase of 5.43 million tonnes in total, to reflect the project's actual capabilities, without any new facilities or construction activities.
- Venture Global LNG said on 1 October 2021 that its Plaquemines LNG submitted to DOE (Department of Energy) two long-term LNG off-take agreements entered into with China's Sinopec. The agreements are for approximately 2.8 and 1.2 million tonnes per year for 20 years, respectively.
- LNG Canada said on 6 October 2021 that work across the LNG Canada project had surpassed the 50% completion mark. The project company also said it remained concerned about cost and schedules increases disclosed by TC Energy to complete its Coastal GasLink pipeline that would connect to the LNG project.
Europe and Russia
- Gazprom announced on 7 October 2021 that Gazprom, Linde, and RusKhimAlyans had signed a Memorandum of Intent (MOI) to assess the possibility of building a third production train at the LNG production plant as part of the Gas Processing Complex near Ust-Luga (GPC of CPECG, forms part of the Complex for processing ethane-containing gas (CPECG)).
- NYK announced on 4 October 2021 that NYK signed long-term time-charter contracts for four newly built LNG carriers with NOVATEK Gas & Power Asia Pte. Ltd. through a joint venture with Sovcomflot. The carriers will be constructed at Samsung Heavy Industries (SHI) in Korea and are slated for delivery from 2023 to 2024.
- Nord Stream 2 announced on 18 October 2021 that the gas-in procedure for the first string of the Nord Stream 2 pipeline had been completed.
- Qatar Petroleum (QP) announced on 11 October 2021 its new name QatarEnergy and a new slogan "Your Energy Transition Partner".
- Qatargas tweeted on 17 October 2021 that it had started construction of four new LNG mega-trains in Ras Laffan Industrial City.
- QP and China National Offshore Oil Corporation (CNOOC) announced on 29 September 2021 that they had entered into a long-term SPA for 3.5 million tonnes per year of LNG over a 15-year period starting January 2022.
- Qatar Petroleum (QP) announced on 3 October 2021 that it had ordered four new LNG carriers from Hudong-Zhonghua Shipbuilding Group Co. Ltd. (Hudong), a subsidiary of China State Shipbuilding Corporation Limited (CSSC). The carriers are the first batch of orders in QP's LNG shipbuilding program, which will cater for future LNG fleet requirements for the North Field expansion projects as well as for existing vessel replacement requirements. This order is also the first ever placed by QP or its affiliates with a Chinese shipyard for LNG ships, and the first with Hudong in connection with the agreement to reserve ship construction capacity that was executed in April 2020.
- TotalEnergies confirmed in its 2021 Strategy & Outlook presentation on 28 September 2021 a two-year delay to its Mozambique LNG production, with first gas now seen in 2026. Project activities are expected to resume in 2022.
- Höegh LNG Partners LP announced on 24 September 2021 that it had entered into an agreement with New Fortress Energy (NFE) to charter the Höegh Gallant for FSRU operations for a period of ten years, with a planned commencement during the fourth quarter of 2021.
Supprted by the Institute of Energy Economics Japan (IEEJ)
- Japan Trend of LNG Inventory data(17.4KB) （Oct 20, 2021 update）
- US Trend of Natural Gas Inventory data(50.5KB) （Oct 20, 2021 update）
- Europe Trend of Natural Gas Inventory data(305.7KB) （Oct 20, 2021 update）
- Europe Trend of LNG Inventory data(190.0KB) （Oct 20, 2021 update）