Jun 2022
Trend of Natural Gas and LNG Prices
Short-term trend
- The assessed spot LNG price for near-month delivery to Northeast Asia, JKM had been hovering in the low USD 20s per million Btu, but rose to the USD 29 on June 15 due to lower supplies caused by the shutdown of Freeport LNG in the United States. The price further rose to USD 39 due to the decrease in gas supply and supply uncertainty in Europe, and has remained at a high level in the latter half of USD 30s since then. JKM has been moving in tandem with the price movement of European gas prices, but the reversal with European prices continues.
- 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 May 2022 and scheduled to be delivered from the month onward (contract-based price) was USD 31.1. 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 remained at the USD 8s in June after reaching the USD 8s at the end of last month, and reached USD 9.29 on 7 June. However, the price reversed course following the accident and shutdown at Freeport LNG in the U.S. on 8 June, and fell to the USD 6s. According to the U.S. Energy Information Administration (EIA), the price outlook is expected to average USD 8.69 for the third quarter of 2022 and USD 4.74 for the year 2023. EIA attributes the high HH prices to lower than average U.S. gas inventories over the past five years, strong domestic natural gas demand for LNG exports, and strong demand from the electric power sector in the face of limited opportunities for natural gas-to-coal switching. It expects U.S. LNG exports to average 11.7 bcf/d in the second and third quarters of 2022, as well as 11.9 bcf/d* in 2022, up 22% from 2021, and 12.6 bcf/d in 2023.
* Note: the above 2022 export will decrease due to the shutdown of Freeport LNG (1.98 bcf/d). - The Dutch TTF Gas Futures price remained in the mid-USD 20s through the first half of June, but rose following a supply outage from Freeport LNG in the U.S. and lower flows from the Nord Stream pipeline, and has since exceeded USD 40s on some days. TTF has generally remained at a high level in the second half of June, roughly in the upper half of USD 30s.
- The reduction in Nord Stream gas flows has further widened the gap between the supply-demand balance between the UK and the continent, further widening the discount of the UK gas price NBP to the TTF.
- Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price was USD 15.58 in May 2022. The Japanese yen denominated price was JPY 104,410 per tonne, partly due to the depreciation of the yen, exceeding JPY 100,000 for the first time in history. 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 18.57, USD 13.44, USD 16.57, and USD 12.15, respectively. Elsewhere in Asia, average import prices in May were USD 14.54 in China, USD 14.04 in Korea, and USD 15.12 in Chinese Taipei. Japan’s average landed crude oil import price (JCC: Japan crude cocktail) was USD 107.74 in May 2022, rising for four consecutive months. Japan’s average LNG import price, which accounts for 70%-80% of long-term contracts linked to JCC prices, is expected to continue to be affected by current crude oil prices.
- Japan imported 5.76 million tonnes of LNG in May 2022, 16% higher than the same month of 2021. The total import volume during the first five months of 2022 was 31.73 million tonnes, a decrease of 4% from the same period of 2021. Notably, Japan’s import of LNG from the United States decreased by 49% from one year earlier to 1.86 million tonnes during the five-month period. China imported 4.93 million tonnes of LNG in May 2022, 28% less than the same month of 2021. China's total LNG import volume during the first five months of 2022 was 26.49 million tonnes, a decrease of 20% from the same period of the previous year. While Korea imported 3.41 million tonnes in May 2022, an increase of 0.4% from the same month of 2021, Chinese Taipei imported 1.78 million tonnes, 0.1% higher than one year earlier. LNG import volume from these four markets was 81.97 million tonnes during the first five months of 2022, a decrease of 13% 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. Trading has been slow since April, with JKM falling from USD 36 to USD 22 in April and remaining in the low USD 20s during May and the first half of June. However, since the second half of June, the price has temporarily risen to USD 39 against the backdrop of growing concerns over natural gas and LNG supply, and has remained at a high level since then.
- JKM's discount to the European gas spot price TTF began to materialize after the end of March against the backdrop of growing uncertainty in gas supply in Europe and declining LNG demand in Northeast Asia, especially China, ranging from USD 1 to USD 10 during April and May. June saw a temporary reversal, but there is still a USD 1 to USD 5 price differential.
- 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 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 USD 9s in February 2021, after falling to the mid-USD 7s in March. It was on the rise as crude oil prices rose, climbing to the high USD 15 in February 2022, but falling to the mid-USD 14s in March and then climbing again to the high USD 15 in April and May.
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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 February 2022 stood at 3.54 million tonnes, a decrease of 9.4% and 0.37 million tonnes from January, and a decrease of 13.2% from February 2021, lower than the past five-year average by 0.27 million tonnes.
- The LNG inventories for city-gas supply as of the end of February 2022 were 1.49 million tonnes, 16.5% lower than January and 2.2% lower than February 2021. LNG consumption for city-gas in February 2022 was 3.29 million tonnes, increased by 7.6% year-on-year. City-gas companies received 3.00 million tonnes of LNG in February 2022, decreasing year-on-year by 9.8%.
- The LNG inventories for power generation as of the end of February 2022 were 2.06 million tonnes, decreasing by 3.4% from January and 19.7% lower than February 2021. LNG consumption for power generation in February 2022 was 4.11 million tonnes, decreasing by 1.3% from January 2021. Power generation companies received 4.53 million tonnes of LNG, decreasing year-on-year by 13.7%.
- According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 29 June 2022, major power utilities’ LNG inventories were 2.15 million tonnes as of 26 June. This is higher by 0.11 million tonnes than the end of June 2021 and 0.20 million tonnes above the average of the end of June of the past four years.
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 17 June 2022, working gas in underground natural gas storage in the United States was 2.17 Tcf, 19.2% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 12.6% lower than those at the same time in 2021 and were 331 Bcf lower than the past five-year average. The latest inventories have been within the past five-year range since November 2020.
Compiled based on data from the U.S. Energy Information Administration (EIA)
Europe
- As of 27 June 2022, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) EU member companies was 633.9 TWh (about 41.93 million tonnes LNG equivalent). The volume was higher than that of one year ago by 21.4% or 111.6 TWh (about 7.38 million tonnes LNG equivalent). The inventories represented 57.3% of the capacity, which was higher than 46.7% on the same day in 2021 and higher than the five-year average of 56.0%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 60.7% and 51.9% of their respective capacities.
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 27 June 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 4.87 million cubic meters (in liquid), 2.3% down from the previous month. The inventories were higher than the same day in 2021 by 25.2% and by 10.0% above the five-year average for the same day.
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
- Additional negative factors are emerging over supply in the global LNG market in the latter half of 2022. The fire accident at the Freeport LNG facility in the United States in early June has resulted in at least three-month suspension of operation, missing 3-5 million tonnes of LNG supply. Russian gas flow to Europe on the Nord Stream 1 pipeline was reduced to 40% of the nominal capacity in middle of June. Although the operator has cited issues of equipment maintenance, continuing reduction could lead to loss of 20 – 30 million tonnes LNG-equivalent of gas on annualised basis.
Asia and Oceania
- TotalEnergies announced on 24 May 2022 a SPA with the Korea's Hanwha Energy Corporation for 600,000 tonnes of LNG per year over 15 years, starting in 2024, sourced from TotalEnergies' global LNG portfolio, delivered to the Tongyeong terminal in Korea, and then used to supply Hanwha & HDC's greenfield 1 GW power plant currently under construction next to the terminal.
- Höegh LNG announced on 25 May 2022 that, after the first quarter of the year ended, Höegh LNG terminated Höegh Giant's FSRU contract in India following the charterer's default of the contractual terms. The charterer is disputing Höegh LNG's entitlement to terminate but it accepts that the FSRU contract is at an end. Höegh LNG has commenced arbitration proceedings against the charterer to confirm the legitimacy of its actions and seek damages.
- Excelerate Energy said that its Payra LNG project was approved in principle by the government of Bangladesh in May 2022. Excelerate has commenced negotiations of the integrated deal, which includes an LNG supply agreement for 3 - 4 million tonnes per year. The company said the Moheshkhali LNG expansion project was also approved in principle by the government of Bangladesh in February 2022. Excelerate has commenced commercial negotiations for the expansion of the terminal, the extension of its regasification agreement by five years to 2038, and an LNG supply agreement to sell up to 1.5 million tonnes per year.
- Shell Australia announced on 30 May 2022 that the company and its joint venture partner, SGH Energy, had taken a final investment decision on the development of the Crux natural gas field, off the coast of Western Australia. Crux will provide further supplies of natural gas to the existing Prelude floating LNG (FLNG) facility. Construction will start in 2022 and first gas is expected in 2027.
North America
- Freeport LNG Development, L.P. provided on 14 June 2022 the update on the incident of 8 June at its Quintana Island liquefaction facility. Completion of all necessary repairs and a return to full plant operations is not expected until late 2022. A resumption of partial operations is targeted to be achieved in approximately 90 days.
- Cheniere Energy, Inc. announced on 25 May 2022 that Cheniere Marketing, LLC had entered into an LNG sale and purchase agreement (SPA) with POSCO International Corporation, part of Korea's largest steelmaker and owner of Korea's first private LNG terminal. POSCO International has agreed to purchase 0.4 million tonnes per year of LNG from Cheniere Marketing on a free-on-board basis for 20 years beginning in late 2026. The SPA is subject to Cheniere making a positive final investment decision to construct the Corpus Christi Stage 3 Project.
- Cheniere Energy, Inc. announced on 9 June 2022 that Cheniere Marketing, LLC had entered into an LNG SPA with Equinor ASA. Equinor has agreed to purchase approximately 1.75 million tonnes per year of LNG on a FOB basis for 15 years. The deliveries will start in the second half of 2026 and reach the full volume in the second half of 2027. Half of the volume is subject to Cheniere making a positive FID to construct additional liquefaction capacity at the Corpus Christi LNG Terminal beyond the seven-train Corpus Christi Stage 3 Project.
- Cheniere Energy, Inc. announced on 22 June 2022, an FID for the Corpus Christi Stage 3 Liquefaction Project (CCL Stage 3). The project is being developed to include up to seven midscale liquefaction trains with a total expected nominal production capacity of over 10 million tonnes per year. Construction is expected to be completed by the end of 2025.
- Enbridge announced on 26 May 2022 the advancement of its Venice Extension Project and Gator Express Meter Project to deliver 1.5 billion cubic feet per day of natural gas to Venture Global's Plaquemines LNG facility in Louisiana. The Gator Express Meter Project is expected to be in service in 2023 and Venice Extension Project is expected to be in service in 2024.
- Sempra Infrastructure and Germany's RWE Supply & Trading announced on 25 May 2022 that they had entered into a heads of agreement (HOA) for 2.25 million tonnes per year of LNG to be supplied on a long-term, FOB basis from the Port Arthur LNG Phase 1 project under development in Jefferson County, Texas. The HOA contemplates a definitive 15-year LNG SPA. The companies have agreed to work toward a broad framework for the reduction, mitigation, and reporting of GHG emissions associated with deliveries of LNG from the Port Arthur LNG project.
- Energy Transfer LP and China Gas Holdings Limited announced on 5 June 2022 that China Gas Hongda Energy Trading Co., LTD. had entered into an LNG Sale and Purchase Agreement with Energy Transfer LNG Export, LLC, related to the Lake Charles LNG project. Energy Transfer LNG will supply 0.7 million tonnes of LNG per year to China Gas on a FOB basis for 25 years, commencing as early as 2026.
- Technip Energies announced on 25 May 2022 that the company and Samsung Engineering had been awarded a Pre-FID Engineering contract for the Texas LNG project in Brownsville, Texas, United States. Through a joint venture with Samsung Engineering, Technip Energies has been appointed lead project contractor charged with project design and delivery.
- Naftogaz of Ukraine announced on 13 June 2022 that it had entered into an agreement with the Canada's Symbio Infrastructure to purchase LNG and green liquid hydrogen (LH2) from Quebec, Canada. The parties signed a Memorandum of Understanding (MoU) on 5 June. Symbio claims that, through its subsidiary GNL Québec, it is developing Énergie Saguenay, the world's first large-scale, carbon-neutral LNG export facility in Quebec. The facility will export 10.5 million tonnes per year of LNG to Europe. The projects are scheduled to commence operations in 2027.
- Venture Global announced on 21 and 22 June 2022, the signing of four long-term SPAs totalling 3.5 million tonnes per year for 20 years. Chevron U.S.A. Inc. will purchase 1 million tonnes per year each from Plaquemines LNG and CP2 LNG. Germany's EnBW will purchase 0.75 million tonnes per year each from the two projects. Plaquemines LNG has been under construction since August 2021, and CP2 LNG construction is expected to start in 2023.
Europe and Russia
- Equinor announced on 2 June 2022 that Hammerfest LNG at Melkøya, Norway, was back in production after the fire in September 2020.
- Italy's Snam announced on 1 June 2022 that the company and Golar LNG Limited had signed an agreement for the Snam Group to acquire 100% of the share capital of Golar LNG NB 13 Corporation, whose sole asset is a FSRU, named "Golar Tundra". The Golar Tundra can operate both as an LNG carrier and as an FSRU. In order to maximise its regasification capacity, the vessel will be located in central-northern Italy, close to the areas with greatest gas consumption. The Golar Tundra is expected to start operations as an FSRU during the spring of 2023.
- Estonia's Elering announced on 8 June 2022 that construction activities by Connecto AS had started for pipeline connection for the Paldiski LNG terminal.
Other regions
- A series of announcements regarding partners in Qatar's North Field East (NFE) LNG project were made in late June 2022. Four separate JV companies holding a combined 75% interest in the NFE project will be formed between QatarEnergy and four respective international partners - TotalEnergies, ExxonMobil, Eni, and ConocoPhillips. QatarEnergy will own a 75% interest in each JV company, and the four partners will each own the remaining 25% in the respective JV companies. The JV companies in which TotalEnergies and ExxonMobil participate will each own a 25% interest in the entire NFE project, while the JV companies in which Eni and ConocoPhillips participate will each own a 12.5% interest in the project.
- ENI announced on 18 June 2022 as the Upstream Operator of Area 4 on behalf of its partners ExxonMobil, CNPC, GALP, KOGAS and ENH, that the Coral South Project had achieved the introduction of hydrocarbons to the (FLNG) plant from the Coral South reservoir offshore Mozambique. Coral Sul FLNG plans to achieve its first LNG cargo in the second half of 2022.
- Tanzania's Energy Ministry announced on 11 June 2022 a framework agreement with Equinor and Shell on an LNG export project. The Energy Ministry said that it expected an FID in 2025 on the project.
Supprted by the Institute of Energy Economics Japan (IEEJ)
添付ファイル
- Japan Trend of LNG Inventory data(18.5KB) (Jun 30, 2022 update)
- US Trend of Natural Gas Inventory data(51.5KB) (Jun 30, 2022 update)
- Europe Trend of Natural Gas Inventory data(352.5KB) (Jun 30, 2022 update)
- Europe Trend of LNG Inventory data(18.5KB) (Jun 30, 2022 update)