Feb 2022

Trend of Natural Gas and LNG Prices

Short-term trend

  • The assessed spot LNG price for near-month delivery to Northeast Asia, JKM hovered in the high of USD 20s per million Btu to the middle of February, then jumped to USD 36 on 24 February due to the Russian Attack to Ukraine and fell to USD 33 on 25 February. JKM has been moving in line with European gas prices. There are concerns over disruptions of LNG production in Malaysia and Australia, cold weather forecast in Northeast Asia, and lingering uncertainty over gas supply to Europe due to geopolitical tensions.
  • 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 January 2022 and scheduled to be delivered from the month onward (contract-based price) was USD 26.0. 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 temporarily rose to the USD 5.5 at the beginning of February and fell to below USD 4 and hovering in the middle of USD 4 range toward the end of the month. According to the U.S. Energy Information Administration (EIA), the increasing natural gas prices reflect a relatively cold weather in January, the demand of heating and electricity, and continued strong demand for U.S. LNG. EIA forecasts an average of USD 3.82 in the first quarter of 2022 and average USD 3.79 for all of 2022. U.S. LNG exports were estimated to be about 7.2 million tonnes in January 2022, higher than the average of approximately 6.7 million tonnes per month in the fourth quarter of 2021. EIA expects the U.S. LNG export capacity will contribute to LNG exports rising to about 86 million tonnes in 2022, up 16% from the previous year.
  • The Dutch TTF Gas Futures price continued rising from USD 27 at the beginning of February to low of USD 20s by the middle of the month and turned upward as the situation in Ukraine became more tense and surged to USD 44 on 24 February due to the Russian Attack to Ukraine, then dropped sharply to USD 30 the next day. 
  • Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 13.77 in January 2022. 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 15.30, USD 14.40, USD 15.28, and USD 13.67, respectively. Elsewhere in Asian, average import prices in January were USD 21.92 in Korea, USD 21.35 in Chinese Taipei (As of 25 February, China's trade statistics have not yet been released.). The Japan’s average landed crude oil import price (JCC: Japan crude cocktail) declined to USD 79.64 in January 2022 from the previous month but remains high. Japan’s average LNG import price is expected to continue rising, as long-term contracts linked to JCC prices still account for 70%-80% of LNG imports.
  • Japan imported 6.79 million tonnes of LNG in January 2022, 16% lower than the same month of 2021. While Korea imported 5.00 million tonnes in January 2022, an increase of 13% from the same month of 2021, Chinese Taipei imported 1.43 million tonnes, 1% higher than one year earlier. In January 2022, Europe (EU and the United Kingdom) increased LNG imports by 2.6 million tonnes from December 2021, effectively replacing the decline in Russian pipeline gas supply (As of 25 February, China's trade statistics have not yet been released.).

LNG and Spot Gas Prices, 2020 - 2022

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, above USD 40 in December. In January and February 2022, JKM was in the USD 20s then rose to USD 30 toward the end of February.
  • 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, climbing to USD 14 in November and December, and then falling to the high USD 13s in January 2022.

LNG and Spot Gas Prices, 2012 - 2022

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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© 2022 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 October 2021 stood at 4.99 million tonnes, a decrease of 7.7% or 0.41 million tonnes from September, and an increase of 15.3% from October 2020, exceeding the past five-year average by 0.66 million tonnes but falling below 5 million tonnes for the first time in three months.
  • The LNG inventories for city-gas supply as of the end of October 2021 were 2.45 million tonnes, 2.0% higher than September 2021 and 31.2% higher than October 2020, for the third consecutive month of year-on-year increase. LNG consumption for city-gas in October 2021 was 2.14 million tonnes, decreased by 5.2% from October 2020. City-gas companies received 2.09 million tonnes of LNG in October, decreasing year-on-year by 3.6%.
  • The LNG inventories for power generation as of the end of October 2021 were 2.54 million tonnes, decreasing by 15.4% from September 2021 and 3.3% higher than October 2020. LNG consumption for power generation in October 2021 was 3.08 million tonnes, decreased by 17.2% from October 2020. Power generation companies received 2.98 million tonnes of LNG, decreasing year-on-year by 25.2%.
  • According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 22 February 2022, major power utilities’ LNG inventories were 1.82 million tonnes as of 20 February. This is a decrease of 0.48 million tonnes from the end of February 2021 and 0.16 million tonnes below the average of the end of February of the past four years.

Japan end of month LNG inventory, 2020-2022

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 11 February 2022, working gas in underground natural gas storage in the United States was 1.91 Tcf, 32.0% decrease from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 16.2% lower than those at the same time in 2021 and were 334Bcf 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 February 2022, natural gas inventories through March are projected to total slightly lower than 1.6 Tcf. This is 8 % lower than the five-year average for that time period (2017-2021).

U.S. Natural Gas Underground Storage, 2020 - 2022

U.S. Natural Gas Underground Storage, 2012 - 2022

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

Europe

  • As of 22 February 2022, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) members (including EU and the United Kingdom member companies) was 336.6 TWh (about 22.30 million tonnes LNG equivalent). The volume was lower than that of one year ago by 20.3% or 85.8 TWh (about 5.70 million tonnes LNG equivalent). The inventories represented 30.4% of the capacity, which was lower than 38.0% on the same day in 2021 and the five-year average of 36.2%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 30% and 22% of their respective capacities.
  • As of 22 February 2022, the stored volume of natural gas in Ukraine was 58.6 TWh. The inventories were 22.8% down from the previous month and 59.5% lower year-on-year, and 64.2TWh lower than the five-year average. The inventories represented 18.1% of the capacity, lower than 45.2% on the same day in 2021 and the five-year average of 36.4%.

European Natural Gas Storage, 2020 - 2022

European Natural Gas Storage, 2012 - 2022

(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 22 February 2022, 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 3.03 million cubic metres (in liquid), 34.6% down from the previous month. The inventories were lower than the same day in 2021 by 21.8% and by 18.4% below the five-year average for the same day.

European LNG Inventory, 2020 - 2022

European LNG Inventory, 2012 - 2022

(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

  • There have been signs of increasing LNG production in the United States, including substantial completion of Train 6 at the Sabine Pass Liquefaction plant and initial production and commencement of export operation at Venture Global LNG Calcasieu Pass plant. Around half of LNG imports of 9.6 million tonnes into the European Union and the United Kingdom in January 2022 came from the United States.

 

Asia and Oceania

  • Saibu Gas announced on 3 February 2022 that the company has received a first 'carbon-neutral LNG' cargo, procured from Tokyo Gas, at its Hibiki LNG terminal on the preceding day.
  • Thailand's PTT announced on 15 February 2022 that the company and Electricity Generating Authority of Thailand (Egat) had signed a joint venture agreement to invest in the second LNG receiving terminal project in Rayong, which is expected to start operation in 2022. The LMPT2 terminal is designed to have a capacity of 7.5 million tonnes a year.
  • ConocoPhillips announced on 17 February 2022 that it had completed the purchase of an additional 10% shareholding interest in Australia Pacific LNG (APLNG) from Origin Energy. ConocoPhillips owns a 47.5% interest in APLNG, with Origin Energy and Sinopec owning 27.5% and 25% interests, respectively.
  • Gazprom announced on 4 February 2022 that the company and CNPC signed a long-term Sales and Purchase Agreement for natural gas to be supplied via the Eastern route. Russian pipeline gas supply to China is going to increase grow by 10 Bcm, totalling 48 Bcm per year.

 

North America

  • The U.S. Federal Energy Regulatory Commission (FERC) approved on 17 February 2022 two policy items that may have an effect on pipeline and LNG export projects. The first policy change (Updated Pipeline Certificate Policy Statement), revising agency policy for certifying gas projects, revamps how FERC determines if there is enough "public need" for a proposed project to justify approval. The second policy (Interim Greenhouse Gas (GHG) Emissions Policy Statement), an interim change that could be revised based on public comments, will create a framework for evaluating a project's likely GHG emissions and effects on climate change. FERC said it will encourage developers to propose plans to mitigate a project's emissions, and it will generally presume a project emitting more than 100,000 tonnes per year of CO2 equivalent requires a full environmental impact statement.
  • Cheniere Energy announced on 7 February 2022 that Substantial Completion of Train 6 at the Sabine Pass liquefaction project in Cameron Parish, Louisiana (SPL Project) was achieved on 4 February 2022. Commissioning is complete and Cheniere's engineering, procurement and construction partner, Bechtel Oil, Gas and Chemicals, Inc. has turned over care, custody, and control of Train 6 to Cheniere.
  • Venture Global LNG requested on 3 February 2022 FERC authorization to load the first LNG export cargo from its Calcasieu Pass project in Louisiana as early as 9 February. The project produced its first LNG on 19 January, according to the company's filing with FERC.
  • Tellurian said on 2 February 2022 that the company planned to start construction on its Driftwood LNG plant in Louisiana in April.
  • Energy Transfer on 3 February 2022 asked FERC for a 3-year extension to its permit to build its Lake Charles LNG facility through late 2028, according to the company's FERC filing.
  • In late January 2022 Governor of Alaska pointed to the merits of a new independent analysis on the Alaska LNG project, which estimates that the pricing of Alaska's LNG project would be lower than pricing for other U.S. projects that are competing for the same Asian markets. Alaska's proximity to Asia also provides a shipping cost advantage. The recently passed Infrastructure Investment and Jobs Act reaffirmed the availability of an estimated USD 25 billion in federal loan guarantees for an Alaska liquefied natural gas project.
  • Pembina Pipeline Corporation announced on 8 February 2022 that its and the Haisla Nation's Cedar LNG export project in Kitimat, British Columbia, had applied for an Environmental Assessment Certificate (EAC) to the British Columbia Environmental Assessment Office, moving the project into the 180-day application review phase. Cedar LNG also announced an agreement with Black & Veatch and Samsung Heavy Industries (SHI) for the front-end engineering and design (FEED) of the proposed floating liquefaction, storage and offloading unit (FLNG). Cedar LNG expects to make an FID in 2023. The expected in-service date is in 2027.
  • Sempra announced on 31 January 2022 that Mexico's Comisión Federal de Electricidad (CFE) and Sempra Infrastructure had signed a non-binding MOU for the development of projects, including Vista Pacífico LNG, a liquefaction project in Topolobampo, Sinaloa; a regasification project in La Paz, Baja California Sur; and the resumption of operations of the Guaymas-El Oro pipeline in Sonora. The development of the projects would allow CFE to optimize excess natural gas and pipeline capacity from Texas to Topolobampo.

 

Europe and Russia

  • Norway's Equinor said on 31 January 2022 that due to continuing consequences from the pandemic and operational restrictions the time of start-up of the Hammerfest LNG plant was pushed from 31 March 2022 to 17 May 2022.
  • Fluxys announced on 1 February 2022 that Dunkerque LNG was organising a Call for Market Interest process ("Capacity 2023-2036") offering an opportunity to book up to 3.5 Bcm per year of regasification capacity with a minimum of 3 years.
  • Greece's Gastrade announced on 31 January 2022 that the FID for the construction of the Independent Natural Gas System (INGS) of Alexandroupolis was taken on the previous day. The Floating Storage and Regasification Unit (FSRU) will be connected to the National Natural Gas Transmission System of Greece with a 28 km long pipeline, enabling the gasified LNG to be transmitted to the markets of Greece, Bulgaria and the wider region, from Romania, Serbia and North Macedonia, as all the way to Moldova and Ukraine. The Terminal is expected to operate by the end of 2023, with the contracted regasification capacity already reaching up to 50% of its technical capacity of 5.5 Bcm per year.

 

Other regions

  • Qatargas denied on 18 February 2022 recent media reports speculating that Qatargas may be experiencing unplanned shutdowns of two LNG trains. Qatargas said these shutdowns were coordinated with all parts of operations, shipping and customers as part of annual planning exercises.
  • ENI said on 18 February 2022 that it planned to develop its Congo LNG project to target a start-up in 2023 and full capacity, 2 million tonnes per year, in 2024.

 

 

Supprted by the Institute of Energy Economics Japan (IEEJ)

 

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