Nov 2021

Trend of Natural Gas and LNG Prices

Short-term trend

  • The assessed spot LNG price JKM for near-month delivery to Northeast Asia remained in the low USD 30 per million Btu at the end of October 2021, then fell to the high USD 20 in the early of November, following European spot gas prices, rose again has hovered in the middle of USD 30 towards the end of the month. The strong demand from Northeast Asia and Europe, high gas prices in Europe and the LNG supply limitation due to the supply disruptions in Malaysia, have 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 October 2021 and scheduled to be delivered from the month onward (contract-based price) was USD 26.5. 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 reached USD 6.2 in late October, fell to the USD 4.7 in early November, and hovering around USD 5 at the end of the month. According to the EIA (U.S. Energy Information Administration), the rising natural gas prices in recent months reflect natural gas inventory levels in the United States that are below the five-year (2016–20) average, and have been supported by the relatively high domestic power generation demand along with strong global demand for LNG exports. EIA forecasts an average of USD 5.53 from November 2021 to February 2022. Thereafter, as natural gas production increases, with LNG exports limited due to seasonal demand declines, an average of USD 3.93 for the entire year 2022 is forecast.
  • The TTF fell from the USD 31s to the USD 22s at the end of October, remained below USD 25 in early November, then rose again, and hovered around USD 30 toward the end of the month. The main factor for the temporarily low price in late October was the Russian President's direction to increase natural gas supply to Europe. However, prices have been on the rise again due to low European gas storage levels, sluggish Russian pipeline gas supply through Ukraine, and the German regulator's suspension of certification process of Nord Stream 2 pipeline operation.
  • Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 11.87 in October 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 13.68, USD 10.81, USD 10.76 and USD 10.99, respectively. Other Asian countries’ average import prices in October were USD 12.79 in China, USD 12.88 in Korea, USD 12.11 in Chinese Taipei, therefore Japan enjoyed the lowest price in the region. The Japan’s average landed crude oil import rice (JCC: Japan crude cocktail) increased to USD 76.81 in October 2021, the highest in four years, 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 70%-80% of LNG imports.
  • Japan imported 4.63 million tonnes of LNG in October 2021, 22% lower than the same month of 2020 and the lowest for October since 2005, due to larger volumes in earlier months to pile up inventories in preparation for the coming winter. The total import volume from January to October was 61.42 million tonnes, an increase of 1% from the same period of 2020. China imported 6.17 million tonnes of LNG in October 2021, 24% more than the same month of 2020. China's total LNG import volume from January to October was 64.50 million tonnes, an increase of 23% from the same period of the previous year, exceeding the total volume of Japan. While Korea imported 3.90 million tonnes in October 2021, an increase of 1% from the same month of 2020, Chinese Taipei imported 1.52 million tonnes, 14% higher than one year earlier. Monthly LNG imports into the four markets combined have increased year-on-year since January 2020 and the import volume during the ten-month period of 2021 was 180.19 million tonnes, a 13% increase year-on-year.

LNG and Spot Gas Prices, 2019 - 2021

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 thereafter. Moving along with the also high European gas prices and briefly surpassing USD 56 in October, JKM remained in the middle of USD 30s in November.
  • 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 been on the rise as crude oil prices have risen, reaching high USD 10 in September, and then climbing to the high USD 11s in October, the highest since 2015.

LNG and Spot Gas Prices, 2011-2021

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(source)
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

  • Japan's LNG inventories as of the end of July 2021 stood at 4.54 million tonnes, a decrease of 0.2% or 0.01million tonnes from June, and a decrease of 8.9% from July 2020. The LNG inventories of 4.54 million tonnes were higher than the past five-year average by 0.42 million tonnes, and still within the past five-year range.
  • The LNG inventories for city-gas supply as of the end of July were 1.61 million tonnes, 14.4% lower than June 2021. However, they were 24.1% lower than July 2020. LNG consumption for city-gas was 2.42 million tonnes, increasing by 7.0% year-on-year in July 2021. City-gas companies received 2.08 million tonnes of LNG in July, decreasing year-on-year by 5.3%. The LNG inventories for city-gas have been lower by more than 10% year-on-year for eleven consecutive months since September 2020, resulting in the lowest inventory level since 2018.
  • The LNG inventories for power generation in July 2021 were 2.93 million tonnes, increasing by 10.1% from June 2021 and 2.6% higher than July 2020. LNG consumption for power generation in July 2021 increased by 2.6% year-on-year to 3.80 million tonnes, while LNG receipts for power generation in the month increased by 6.9% year-on-year to 4.38 million tonnes.
  • According to the meeting of the Subcommittee on Electricity and Gas Basic Policy held on 18 November 2021 by Ministry of Economy, Trade and Industry, major power utilities had about 2.2 million tonnes of LNG in stock as of 15 November 2021. The inventory was the highest level in the past five years, about 600,000 tonnes more from the same period in 2020.

Japan end of month LNG inventory, 2019-2021

Japan end of month LNG inventory, 2011-2021

(Source)
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.

United States

  • As of 19 November 2021, working gas in underground natural gas storage in the United States was 3.62 Tcf, a 2.1% increase from the previous month, according to the EIA. Gas inventories were 8.0% lower than those at the same time in 2020 and were 58 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 November 2021, natural gas inventories were 3.6 Tcf as of the end of October 2021, 3.0% 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. However, in recent weeks, storage levels have moved closer to average levels as injections outpaced the five-year average in September and October. EIA expects that the gas inventories will decline to 1.6 Tcf by the end of March 2021 when the winter withdrawal season ends, which would be 4% lower than the previous five-year average.

U.S. Natural Gas Underground Storage, 2019 - 2021

U.S. Natural Gas Underground Storage, 2011-2021

(Source)
Compiled based on data from the U.S. Energy Information Administration (EIA)

Europe

  • As of 24 November 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 793.7 TWh. The inventories represented 71.1% of the capacity, lower than 90.9% on the same day in 2020 and the five-year average of 83.1%. The inventories were 862.7 TWh at the end of the injection season, 31 October 2021, which was the lowest since 2014, 14% and 8.9% lower than the five-year average and the five-year minimum, respectively. Notably, the inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 21.5% and 32.6% lower than their five-year average of 31 October, respectively.
  • As of 24 November 2021, the stored volume of natural gas in Ukraine was 121.9 TWh. The inventories were 13.8% down from the previous month and 47.2% lower year-on-year, and 69.2 TWh lower than the five-year average. The inventories represented 38.3% of the capacity, lower than 72.2% on the same day in 2020 and the five-year average of 58.5%.

European Underground Natural Gas Storage, 2019 - 2021

European Underground Natural Gas Storage, 2011-2021

(Source)
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 November 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 5.15 million cubic metres (in liquid), 17.0% down from the previous month. The inventories were higher than the same day in 2020 by 4.3% and 5.3% above the five-year average.

European LNG Inventory, 2019 - 2021

European LNG Inventory, 2011 - 2021

(Source)
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

Highlights

  • Chinese companies have continued securing LNG volumes under long-term contracts. Sinochem Group singed a SPA with Cheniere Energy, Sinopec and Sinopec subsidiary UNIPEC signed SPAs with Venture Global LNG.

 

Asia and Oceania

  • Singapore's Pavilion Energy, QatarEnergy, and Chevron announced on 17 November 2021 that they had jointly published a quantification and reporting methodology to produce a statement of greenhouse gas emissions for delivered LNG cargoes. This is the first such published methodology that will be applied to SPAs, specifically the executed SPAs by Pavilion Energy with QatarEnergy and Chevron
  • ExxonMobil announced in early November 2021 that it signed a MoU each with Pertamina and PETRONAS to collaborate on carbon capture and storage technologies projects in Indonesia and Malaysia, respectively.
  • Australia's Origin Energy Limited announced on 25 October 2021 that it had executed an agreement with EIG to sell a 10% shareholding in Australia Pacific LNG (APLNG). After completion of the sale, the joint venture shareholders will comprise ConocoPhillips (37.5%), Origin (27.5%), Sinopec (25%) and EIG (10%). The divestment will not change Origin's role as upstream operator, responsible for the upstream exploration, development, and production activities.
  • Australia's Santos and Beach Energy announced on 1 November 2021 an FID to proceed with the Moomba CCS project in South Australia, with start-up expected in 2024. Santos has registered the project with the Clean Energy Regulator. The Clean Energy Regulator's CCS method provides a crediting period of 25 years, over which period the project will qualify for Australian Carbon Credit Units (ACCUs) for emissions reduction.
  • Chevron Australia, as operator of the Gorgon Project, announced on 11 November 2021 an AUD 40 million investment in Western Australian lower carbon projects. The investment is part of an offsets package Chevron will implement to address a carbon dioxide injection shortfall at the Gorgon natural gas facility over the five-year period until 17 July 2021. The package will also see Chevron fulfil its regulatory obligations through the acquisition and surrender of 5.23 million greenhouse gas offsets.
  • Australia's Woodside announced on 15 November 2021 that it had entered into a sale and purchase agreement with Global Infrastructure Partners (GIP) for the sale of a 49% non-operating interest in the Pluto Train 2 Joint Venture to GIP. Woodside will hold a 51% participating interest in the Pluto Train 2 Joint Venture and remain as operator.
  • Woodside announced on 22 November 2021 that FIDs had been made on the Scarborough and Pluto Train 2 developments, including new domestic gas facilities and modifications to Pluto Train 1. The announcement claimed that Scarborough gas processed through Pluto Train 2 would be one of the lowest carbon intensity sources of LNG delivered to customers in North Asia, with first LNG cargo targeted for 2026.
  • Australia's AGIG announced on 17 November 2021 the completion of the Pluto NW Shelf Interconnector (PNI). The PNI consists of a 30-inch pipeline connecting the inlet facilities next to the Pluto LNG plant, via the metering facilities at Dampier to the outlet facilities within the Karratha Gas Plant. Commissioning and Operations are expected in early 2022. The PNI is for Woodside to transport gas from the Pluto LNG Plant to the North West Shelf's Karratha Gas Plant for both LNG export and domestic supply. The Interconnector is just over 3 km long and will initially transport about 250 TJ/day potentially rising to over 900 TJ/day (6 million tonnes per year) during its operations.

 

North America

  • Cheniere Energy announced on 25 October 2021 that Cheniere Marketing had entered into an SPA with Glencore. Glencore has agreed to purchase approximately 0.8 million tonnes per year of LNG from Cheniere Marketing on an FOB basis for 13 years beginning in April 2023.
  • Cheniere Energy announced on 5 November 2021 that Cheniere Marketing had entered into a binding SPA with China's Sinochem Group. Sinochem Group has agreed to purchase an initial volume of approximately 0.9 million tonnes per year beginning in July 2022, which increases to 1.8 million tonnes per year. The SPA has a term of approximately 17.5 years and Sinochem Group will purchase the LNG volumes on a free-on-board basis.
  • JERA announced on 15 November 2021 that it had decided to invest in Freeport LNG Development, L.P. (FLNG), which operates the Freeport LNG project in the United States, and has concluded a securities purchase agreement with Global Infrastructure Partners to acquire the 25.7% interest in FLNG. As a result of the Transaction, JERA will not only be involved in the entire existing Freeport LNG project (three trains with an annual production capacity of approximately 15.45 million tonnes per year) but will also work with FLNG to advance new LNG projects including production capacity expansion and the development of Train 4.
  • FLNG and Talos Energy announced on 15 November 2021 that the companies had executed a letter of intent (LOI) to develop a carbon capture and sequestration (CCS) project, the Freeport LNG CCS project (FLNG CCS), adjacent to Freeport LNG's natural gas pre-treatment facilities. The companies anticipate first injection could occur by year-end 2024. The FLNG CCS project will utilize a Freeport LNG-owned geological sequestration site located near point of capture with up to a 30-year injection term and will permanently sequester CO2.
  • Venture Global LNG and Sinopec announced on 4 November 2021 the signing of two 20-year SPA for the supply of a total of 4 million tonnes per year of LNG from Venture Global's Plaquemines LNG export facility. In addition, UNIPEC, a Sinopec subsidiary has agreed to purchase 3.5 million tonnes of LNG from Venture Global's Calcasieu Pass LNG facility for a shorter duration. Venture Global LNG said that this represented the largest single LNG supply deal to China ever signed by a U.S. company.

 

Europe and Russia

  • Gazprom announced on 1 November 2021 that it produced 422.6 billion cubic meters of gas during the first 10 months of the year, 15.8% more than in the same period of 2020.
  • German network regulator Bundesnetzagentur announced on 16 November 2021 that it had suspended the procedure to certify Nord Stream 2 AG as an independent transmission operator. The regulator concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organised in a legal form under German law.

 

Other regions

  • QatarEnergy announced on 7 November 2021 that it had placed LNG shipbuilding orders with Korean shipyards consisting of four vessels from Daewoo Shipbuilding & Marine Engineering (DSME) and two vessels from Samsung Heavy Industries (SHI).
  • Korean companies announced on 18 November 2021 that Kuwait's Al-Zour LNG Import Terminal had completed trials of the regasification facilities and the storage tanks and started commercial operation.
  • Eni announced that the company on behalf of its Area 4 Partners (ExxonMobil, CNPC, GALP, KOGAS and ENH) held on 15 November 2021 the naming ceremony of the Coral-Sul FLNG at Samsung Heavy Industries shipyard in Geoje, Korea. The FLNG will be towed and moored at its operating site in the Rovuma basin offshore Mozambique. Production start-up is expected in the second half of 2022.
  • DNG Energy said on 16 November 2021 that South Africa had received its first-ever container of LNG at the Port of Ngqurha from the Netherlands. The company said it planned to commission its first floating storage unit in the first quarter of 2022.
  • GIIGNL announced on 17 November 2021 a Framework for GHG emissions reporting and offsetting designed for LNG cargoes, with all stages from upstream to downstream considered.
  • The Panama Canal closed its fiscal year 2021 (FY21 October 2020 - September 2021) with a record-breaking annual tonnage, 8.7% higher compared to the 2020 fiscal year (FY20) and 10% above tonnage registered in FY19, driven by LNG, LPG, and others. LNG carriers registered a 31.4% increase in tonnage through the Panama Canal, representing the largest gain across all segments. LNG also set new annual records for total tonnage and transits, in addition to monthly tonnage and transit records in January 2021.
  • New Fortress Energy said on 2 November 2021 that the company expected to complete LNG terminal and power plant construction in Nicaragua in Q4 2021 and to begin commissioning of the company's power plant in Q1 2022. The company's La Paz LNG terminal in Baja California Sur, Mexico, is fully operational.

 

 

Supprted by the Institute of Energy Economics Japan (IEEJ)

 

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