Trend of Natural Gas and LNG Prices

Short-term trend

• The assessed spot LNG price for near-month delivery to Northeast Asia, JKM hovered around the USD 30s per million Btu in early of March, then jumped to USD 84.8 on 7 March due to the spike in TTF Gas Futures price, but fell back, and remained in the USD 30s toward the end of the month. JKM has been moving in line with European gas prices. On the supply and demand side, LNG production disruptions continue in Malaysia and Australia, and spot cargos demand in the Northeast Asia is increasing in the near term. In particular, geopolitical tension with regard to gas supplies to Europe is a factor driving prices higher.
• 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 February 2022 and scheduled to be delivered from the month onward (contract-based price) was USD 26.4. 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 at the beginning of March and fell to middle of USD 4 and rising to the low USD 5s toward the end of the month. According to the U.S. Energy Information Administration (EIA), the price outlook is expected to average USD 3.83 for the second quarter of 2022, average USD 3.95 for all of 2022, and average USD 3.59 for the year 2023. U.S. LNG exports were estimated to be about 6.4 million tonnes in February 2022 was lower than the previous month, many LNG cargoes have been delivered to Europe, where there are concerns about Ukraine-related gas supply concerns. 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 surged to USD 72 on 7 March due to fears of Russian pipeline gas supply disruptions, then fell to the low USD 30s by mid-month and remained in the middle of USD 30s toward the end of the month. European underground gas storage level is approaching to its five-year average due to a number of additional LNG receipts, mainly from the United States, and a warm winter. However, European gas prices have been volatile amid the geopolitical tensions.
• Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 15.98 in February 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 21.26, USD 13.38, USD 15.58, and USD 16.04, respectively. Elsewhere in Asian, average import prices in February were USD 13.01 in China, USD 16.27 in Korea, USD 14.69 in Chinese Taipei. The Japan’s average landed crude oil import price (JCC: Japan crude cocktail) was USD 86.69 in February 2022, the highest since November 2014. Japan’s average LNG import price, which accounts for 70%-80％ of long-term contracts linked to JCC prices, is expected to continue rise  to the current rise in crude oil prices.
• Japan imported 7.11 million tonnes of LNG in February 2022, 12% lower than the same month of 2021. The total import volume during the first two months of 2022 was 13.89 million tonnes, a decrease of 14% from the same period of 2021. China imported 4.86 million tonnes of LNG in February 2022, 12% less than the same month of 2021. China's total LNG import volume during the first two months of 2022 was 12.68 million tonnes, a decrease of 9% from the same period of the previous year. While Korea imported 3.48 million tonnes in February 2022, a decrease of 33% from the same month of 2021, Chinese Taipei imported 1.59 million tonnes, 21% higher than one year earlier. LNG import volume from these four markets was 38.08 million tonnes during the first two months of 2022, a 10% decrease 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 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, temporarily surged to USD 85 in March due to fears of Russian pipeline gas supply disruptions, and then hovered around the USD 30s.
• 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, then falling to the high USD 13s in January 2022, and rising to high USD 15 in February.

Trend of Natural Gas and LNG Inventories

Japan

• Japan's LNG inventories as of the end of November 2021 stood at 5.9 million tonnes, an increase of 1.9% and 0.97 million tonnes from October, and an increase of 30.4% from November 2020, exceeding the past five-year average by 0.71 million tonnes and rising to over 5 million tonnes for the first time in second months.
• The LNG inventories for city-gas supply as of the end of November 2021 were 2.42 million tonnes, 1.4% lower than October and 41.2% higher than November 2020. LNG consumption for city-gas in November 2021 was 2.51 million tonnes, decreased by 1.7% year-on-year. City-gas companies received 2.24 million tonnes of LNG in November 2021, increasing year-on-year by 0.9%.
• The LNG inventories for power generation as of the end of November 2021 were 2.67 million tonnes, increasing by 5.1% from October and 22.0% higher than November 2020. LNG consumption for power generation in November 2021 was 3.33 million tonnes, decreasing by 15.3% from November 2020. Power generation companies received 3.86 million tonnes of LNG, decreasing year-on-year by 10.0%.
• According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 16 March 2022, major power utilities’ LNG inventories were 1.72 million tonnes as of 13 March. This is already lower by 0.69 million tonnes than the end of March 2021 and 0.47 million tonnes below the average of the end of March of the past four years.

United States

• As of 11 March 2022, working gas in underground natural gas storage in the United States was 1.44 Tcf, 24.6% decrease from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 19.2% lower than those at the same time in 2021 and were 320 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 March 2022, natural gas inventories through March are projected to end at a total of 1.5 Tcf. This is 10.0 % lower than the five-year average (2017 - 2021) for the time of the year.

Europe

• As of 20 March 2022, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) EU member companies was 285.0 TWh (about 18.90 million tonnes LNG equivalent). The volume was lower than that of one year ago by 16.4% or 56.0 TWh (about 3.71 million tonnes LNG equivalent). The inventories represented 25.7% of the capacity, which was lower than 30.8% on the same day in 2021 and the five-year average of 29.1%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 25% and 20% of their respective capacities.

 

• As of 20 March 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 3.36 million cubic metres (in liquid), 11.1% down from the previous month. The inventories were lower than the same day in 2021 by 12.8% and by 9.3% below the five-year average for the same day.

Latest Developments in Major Natural Gas and LNG Projects

Highlights

• In the G7 Energy Ministers' Joint Statement, the Energy Ministers of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America, and the European Union Commissioner for Energy agreed on the important role LNG can play in order to mitigate potential supply disruptions of pipeline gas, especially to European markets. The ministers recognized the role that LNG is playing and acknowledge that investment in this sector is necessary due to the current crisis.

 

Asia and Oceania

• Tokyo Gas Engineering Solutions Co., Ltd., Shikoku Electric Power, Shikoku Gas Co., Ltd. and partners announced on 2 March 2022 that their joint-venture Niihama LNG Co., Ltd. had completed construction of its LNG receiving terminal at the site of Sumitomo Chemical Co., Ltd.'s Ehime Plant and started supplying gas to facilities within the site, with a plan to start distributing gas to industrial customers around the site in March.
• Australia's Santos announced on 28 February 2022 that the company, SK E&S, K-CCUS Association, CO2CRC and Korea Trade Insurance Corporation had signed a Memorandum of Understanding (MOU) to support and collaborate in the development ofCO2 storage facilities. CCS at Bayu-Undan would have the potential capacity to store 10 million tonnes of carbon dioxide per year. Santos announced on 9 March entry into the front-end engineering and design (FEED) phase for the Bayu-Undan CCS project.
• ExxonMobil announced on 21 February 2022 that Esso PNG P'nyang Limited, Ampolex Limited, and the Independent State of Papua New Guinea had signed the P'nyang project gas agreement for the proposed development of the P'nyang LNG project. The project would deliver LNG by constructing new upstream facilities in Western Province linked to existing infrastructure. The P'nyang field is estimated to have 4.36 trillion cubic feet of gas.
• India's H-Energy announced that the country's first Floating Storage and Regasification Unit (FSRU), the Höegh Giant, arrived at the company's Jaigarh terminal in Maharashtra on 1 March 2022.

 

North America

• Cheniere Energy announced on 24 February 2022 that its subsidiary, Cheniere Corpus Christi Liquefaction Stage III, LLC, had amended the long-term Integrated Production Marketing (IPM) gas supply agreement signed in 2019 with EOG Resources, Inc., extending the term and tripling the volume of LNG associated with the natural gas supply under the long-term IPM transaction. EOG has agreed to sell 420,000 MBtu of natural gas per day to CCL Stage III for a period of 15 years.
• Cheniere Energy announced on 9 March 2022 that its subsidiary, Corpus Christi Liquefaction, LLC (CCL), had agreed with Engie to amend the SPA that the parties previously entered into in June 2021. Engie has agreed to purchase approximately 0.9 million tonnes per year of LNG from CCL on a free-on-board (FOB) basis for a term of approximately 20 years, which began in September 2021.
• Cheniere Energy announced on 7 March 2022 that its subsidiary, Cheniere Corpus Christi Liquefaction Stage III, LLC, had entered into a lump sum, turnkey, engineering, procurement and construction (EPC) contract with Bechtel for the Corpus Christi Stage III Project. The Corpus Christi Stage III Project is a fully permitted project consisting of up to seven mid-scale trains, each with an expected liquefaction capacity of approximately 1.49 million tonnes per year with a total production capacity of more than 10 million tonnes per year. The company expects an FID on the project to occur in summer 2022 and LNG shipments starting in 2025.
• Venture Global LNG and JERA announced on 1 March 2022 loading and departure of the first cargo of LNG produced at the Calcasieu Pass LNG export facility in Cameron, Louisiana. Calcasieu Pass moved from FID to LNG production in 29 months.
• Venture Global LNG announced on 7 March 2022 a new long-term 20-year SPA with Shell for 2 million tonnes per year of LNG from Venture Global's Plaquemines LNG export facility. Plaquemines LNG　is under construction and expected to come online in 2024.
• Venture Global LNG and New Fortress Energy (NFE) announced on 16 March 2022 that they had concluded two new long-term 20-year SPAs, including 1 million tonnes per year each from Plaquemines LNG and CP2 LNG. This is the first SPA for the CP2 LNG facility, which VG LNG expects to commence construction on in 2023. VG LNG also said that it expected to soon take formal FID and close project financing for Plaquemines LNG with 14 million tonnes of the 20 million tonnes per year nameplate capacity.
• TC Energy Corporation announced on 9 March 2022 signing of option agreements to sell a 10% equity interest in the Coastal GasLink Pipeline Limited Partnership to Indigenous communities across the project corridor.

 

Europe and Russia

• Shell announced on 28 February 2022 its intention to exit its joint ventures with Gazprom and related entities, including its 27.5% stake in the Sakhalin-II LNG facility. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.
• ExxonMobil announced on 1 March 2022 that it would discontinue operations at Sakhalin-1 and make no new investments in Russia.
• German LNG Terminal announced that on 4 March 2022, Netherlands' Gasunie and the Kreditanstalt für Wiederaufbau (KfW) (on behalf of the German Federal Government) signed a Memorandum of Understanding (MoU) to take the project into a next phase and start the joint construction of the LNG terminal in Brunsbüttel.
• Belgium's shipping company EXMAR announced on 18 March 2022 that it had reached an agreement with Gasunie to charter a regasification barge for the Eemshaven LNG project in Groningen for 5 years. EXMAR said that the plan was to deploy the FSRU and have the terminal ready by the end of Q3 2022.
• Germany's Uniper announced on 16 March 2022 that from 1 October 2022 Uniper would increase its capacity rights at the Gate terminal, a joint venture of Vopak and Gasunie, by 1 bcm per year for a period of three years. In anticipation of a tight gas market, Uniper and Gate then committed to a capacity increase of 1 bcm per year starting 1 October 2024. Those transactions supplement the existing capacity of 3 bcm per year that Uniper holds since the start of Gate terminal.
• The operator of the Lithuania's LNG terminal, KN, has informed users that from 3 March 2022 acceptance of Novatek cargoes at the LNG terminal is suspended. KN announced on 17 March that the Klaipėda LNG terminal's regasification capacity had been fully booked for the gas year until 30 September 2022.
• GIIGNL said on 3 March 2022 that facilitating long-term agreements, investments and all possible measures in LNG is critical to energy security, economic stability and decarbonization. The Press Release also mentioned that GIIGNL and its members were fully mobilized to work with governments, LNG producers and other relevant stakeholders in order to ensure a stable supply of LNG and preserve LNG's affordability.
• The European Commission released a plan to make Europe independent from Russian fossil fuels well before 2030, starting with gas. REPowerEU will seek to diversify gas supplies, speed up the roll-out of renewable gases and replace gas in heating and power generation. This can reduce EU demand for Russian gas by two thirds before the end of the year.

 

Other regions

• New Fortress Energy Inc. (NFE) announced on 28 February 2022 a Heads of Agreement (HoA) with Eni for the deployment of NFE's Fast LNG liquefaction technology off the coast of the Republic of the Congo for 20 years. NFE will deploy its "Fast LNG" facility to produce up to 1.4 million tonnes per year of LNG in the associated gas fields. The production is expected to start in Q2 of 2023.

 

 

Supprted by the Institute of Energy Economics Japan (IEEJ)