Trend of Natural Gas and LNG Prices

Short-term trend

Asia

• The assessed spot LNG price for near-month delivery to Northeast Asia, JKM was USD 26 per million Btu on 1 November and generally remained in the high USD 20s by the second half of November, as high LNG inventories across Asia and relatively mild weather dampened demand and market activity. On 18 November, U.S.-based Freeport LNG announced the postponement of the resumption of the initial productions to mid-December from the originally planned mid-November, then, JKM rose to USD 30 on 21 November the following week. Subsequently, JKM rose to USD 34 on 23 November due to higher European gas prices. Spot demand remained stagnant, but JKM remained in the USD 30 range toward the end of the month.
• 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 2022 and scheduled to be delivered from the month onward (contract-based price) was USD 38.9. 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.
• Based on the preliminary figures from Japan's customs statistics of the Ministry of Finance, the country's average LNG import price remained expensive at USD 20.78 per million Btu and JPY 156,329 per tonne in October 2022, although the figures were lower than those in September. The average landed prices of LNG in Japan from the United States, the ASEAN region, the Middle East, and Russia in October were USD 38.09, USD 19.55, USD 27.01, and USD 16.42, respectively. Elsewhere in Asia, average import prices in October were USD 18.76 in China, USD 23.96 in Korea, and USD 25.93 in Chinese Taipei. Japan’s average landed crude oil import price (JCC: Japan crude cocktail) was USD 105.96 per barrel in October 2022. The Japanese yen denominated price stood at JPY 96,687 per kilolitre, remaining at a high level. 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 5.09 million tonnes of LNG in October 2022, 10% higher than the same month in 2021. The total import volume during the first ten months of 2022 was 60.39 million tonnes, a decrease of 2% from the same period in 2021. China imported 4.03 million tonnes of LNG in October 2022, 34% less than the same month in 2021. China's total LNG import volume during the first ten months of 2022 was 50.51 million tonnes, a decrease of 22% from the same period of the previous year. While Korea imported 4.13 million tonnes in October 2022, an increase of 6% from the same month of 2021, Chinese Taipei imported 1.91 million tonnes, 29% higher than one year earlier. LNG import volume from these four markets was 166.15 million tonnes during the first ten months of 2022, a decrease of 8% year-on-year.

United States

• The Henry Hub Natural Gas Futures price rebounded after reaching USD 5.7 on 1 November, and remained generally in the USD 6s range thereafter, moving back and forth until mid-month, depending on weather forecasts and other factors. On 14 November, HH was at USD 5.9 and then started an upward trend, hitting USD 7.3 on 23 November before falling back to USD 7.0 on 24 November and to USD 6.7 the following week on 28 November. U.S. natural gas underground storage ended its storage season at the end of October. The significant end-of-season fill resulted in a total of 2,516 Bcf this season, a 16% increase over last season and a 9% increase over the previous five-year average.
• According to the U.S. Energy Information Administration’s 8 November Short-Term Energy Outlook, the average natural gas spot price forecast for the fourth quarter of 2022 and the first quarter of 2023 is USD 6.0. The forecast is for a decline after January 2023 as the shortfall in inventories to the historical 5-year average decreases.

Europe

• The Dutch TTF Gas Futures price generally hovered in the low USD 30's until mid-month due to high natural gas underground storage level and low market liquidity, but rose to USD 37.8 on 15 November due to winter demand and other factors. From mid-month, inventory drawdown from underground natural gas storage began and TTF increased slightly from the first half of the month to the second half of USD 30s. On 23 November, as the European Commission presented its proposal to set a gas price cap, TTF rose to USD 39.2 and has remained high, holding in the high USD 30s since the next day.

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, the price reached USD 40 in the second half of June and remained at the same level in July, and in August the price was generally USD 50s, temporarily exceeding USD 60 and USD 70, respectively. In September, JKM showed a declining trend, falling to the high USD 30s and remained generally in the high USD 20s in October and November, but was near USD 30 at month-end.
• 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. The average price then rose to late USD 15s in February 2022 as oil prices rose, falling to mid-USD14s in March. It rose to late USD 15 in April and May, falling to late USD 14s in June, rising to late USD 17s in July, to the high USD 19s in August, and the high USD 22s in September, before falling to the high USD 20s in October.

Trend of Natural Gas and LNG Inventories

Japan

• Japan's LNG inventories as of the end of July 2022 stood at 5.28 million tonnes, an increase of 0.2% and 0.01 million tonnes from June, and an increase of 16.4% from July 2021, higher than the past five-year average by 0.92 million tonnes.
• The LNG inventories for city-gas supply as of the end of July 2022 were 2.51 million tonnes, 1.3% higher than June and 56.0% higher than July 2021. LNG consumption for city-gas in July 2022 was 2.47 million tonnes, increased by 11.1% year-on-year. City-gas companies received 2.50 million tonnes of LNG in June 2022, increasing year-on-year by 19.9%.
• The LNG inventories for power generation as of the end of July 2022 were 2.77 million tonnes, decreasing by 0.8% from June and 5.4% lower than July 2021. LNG consumption for power generation in July 2022 was 3.76 million tonnes, decreasing by 1.2% from July 2021. Power generation companies received 4.14 million tonnes of LNG, decreasing year-on-year by 5.6%.
• According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 26 November 2022, major power utilities’ LNG inventories were 2.61 million tonnes as of 20 November. This is higher by 0.45 million tonnes than the end of November 2021 and 0.66 million tonnes above the average of the end of November of the past five years.

United States

• As of 18 November 2022, working gas in underground natural gas storage in the United States was 3.56 Tcf, 5.0% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 1.6% lower than those at the same time in 2021 and were 39 Bcf lower than the past five-year average. The latest inventories have been within the past five-year range since November 2020.

Europe

• As of 26 November 2022, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) EU member companies was 1051.0 TWh (about 69.52 million tonnes LNG equivalent). The volume was higher than that of one year ago by 35.6% or 276.1 TWh (about 18.27 million tonnes LNG equivalent). The inventories represented 93.9% of the capacity, which was higher than 69.8% on the same day in 2021 and higher than the five-year average of 86.8%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 98.8% and 90.0% of their respective capacities.

 

• As of 26 November 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 5.66 million cubic meters, 2.7% up from the previous month. The inventories were higher than the same day in 2021 by 32.7% and by 10.4% above the five-year average for the same day.

Latest Developments in Major Natural Gas and LNG Projects

Highlights

• East Africa has shipped its first LNG into the global LNG market. Partners have confirmed that LNG production and shipment have begun at the Coral Sul Floating LNG project in Mozambique. Qatar has completed selection processes for international partners to participate in the two expansion LNG projects. 25% of NFE and NFS (North Field East and South) projects are now owned by its European and American partners.

 

Asia and Oceania

• The Japan Bank for International Cooperation (JBIC) announced on 31 October 2022 that the bank had signed a loan agreement for LNG purchases with JERA for JPY 100 billion following a similar deal on 6 October.
• Tokyo Gas Co., Ltd. and Marubeni Corporation announced on 4 November 2022 that the two companies, PetroVietnam Power, the largest IPP operator in the Socialist Republic of Vietnam, and COLAVI, a machinery manufacturer and marketer in the Quảng Ninh province, had established Quảng Ninh LNG Power JSC (QNLP). QNLP will conduct a feasibility study on an LNG-to Power project, including development, construction, and operation of an onshore LNG receiving terminal and a gas-fired power generation plant of 1.5 GW capacity in Cẩm Phả in the Quảng Ninh province, as well as procurement of LNG and sales of power to the Vietnam Electricity Group.
• Tokyo Gas Engineering Solutions Co., Ltd. (TGES) announced on 9 November 2022 that it had been awarded contracts by Gulf MTP LNG Terminal Co. Ltd. (GMTP), a joint venture between Gulf Energy Development Public Company Limited and PTT Tank Corporation, a subsidiary of PTT Public Company Limited (PTT), to update the FEED works for an LNG receiving terminal construction plan and EPCC process management works in the Map Ta Phut district.

 

North America

• Freeport LNG Development, L.P. provided on 15 November 2022 the results of an independent, third-party root cause failure analysis (RCFA) report on the 8 June 2022 incident that occurred at its liquefaction facility. The direct cause was identified as "Isolation of a piping segment containing cryogenic LNG without proper overpressure protection". Freeport LNG is targeting initial production in mid-December. Each of the three trains will be restarted and ramped up safely, with each train starting separately before restarting a subsequent train. It is expected that approximately 2 BCF per day of production will be achieved in January 2023. Full production utilizing both docks remains anticipated to commence in March 2023.
• QatarEnergy announced on 26 October 2022 that affiliates of QatarEnergy and ExxonMobil had agreed to independently offtake and market their respective proportionate equity shares of LNG produced by the Golden Pass LNG Export Project. QatarEnergy Trading LLC will offtake 70% of the LNG produced by Golden Pass LNG. The construction of Golden Pass LNG, which has a total production capacity in excess of 18 million tonnes of LNG per year, is underway with first LNG production expected by the end of 2024.
• Sempra said in its 3Q 2022 Earnings Results presentation on 3 November that Sempra Infrastructure was targeting an FID for Phase 1 of its Port Arthur LNG project in the first quarter of 2023. The company continues to advance its Cameron LNG Phase 2 project under development and anticipates FID on Train 4 after the FEED process is completed, which is currently targeted for the summer of 2023.
• Sempra Infrastructure and Williams announced on 15 November 2022 that they had entered into a HOA for the offtake of LNG and development of associated natural gas pipeline projects. The HOA contemplates two 20-year long-term SPAs for 3 million tonnes per year of LNG in the aggregate from the Port Arthur LNG project and the Cameron LNG Phase 2 project.
• Sempra announced on 22 November 2022 that its subsidiary, Sempra Infrastructure, and ConocoPhillips have executed a 20-year SPA for 5 million tonnes per annum of LNG from Phase 1 of the Port Arthur LNG project under development. The parties have also entered into an equity sale and purchase agreement whereby ConocoPhillips will acquire 30% of the equity in Phase 1 of Port Arthur LNG, and a natural gas supply management agreement whereby ConocoPhillips will manage the feedgas supply requirements for Phase 1 of the liquefaction facility.
• Energy Transfer LP said in its Q3 2022 Earnings Call on 1 November that Lake Charles LNG had executed 6 LNG offtake agreements for an aggregate of nearly 8 million tonnes per year. The company expects to finance a significant portion of the capital cost of the project by means of the sale of equity in the project to infrastructure funds and possibly to one and more industry participants in conjunction with LNG offtake agreement and also said it was targeting FID by the end of the first quarter of 2023.
• Sempra said in its Q3 2022 Earnings Call on 3 November said that construction of the first phase of the Energía Costa Azul (ECA) LNG export project in Baja California, Mexico, was slightly behind the original plan, but the company continued to expect to commence commercial operations in the middle of 2025.
• The U.S. Federal Energy Regulatory Commission (FERC) on 17 November 2022 granted Commonwealth LNG approval to build its proposed LNG plant in Louisiana with a capacity of 8.4 million tonnes per year. Commonwealth LNG has secured two 20-year SPAs with Woodside for up to 2.5 million tonnes per year, an MoU for 1 million tonnes per year with Summit Oil and Shipping Company of Bangladesh, and an HoA for 3 million tonnes per year with Gunvor.
• New Fortress Energy Inc. (NFE) announced on 28 October 2022 that it had finalized its agreements with Comisión Federal de Electricidad (CFE) to supply natural gas to CFE power generation facilities and to use CFE's existing and underutilized pipeline capacity for supplying requisite feedgas to multiple NFE FLNG units.

 

European and surrounding regions

• Intercontinental Exchange (ICE) announced on 27 October 2022 plans to launch two LNG futures contracts for North-West Europe and South-West Europe on 5 December 2022. The contracts will be cash settled based on Spark Commodities' price assessments for LNG cargos. ICE says that it is ready to assist with developing an EU futures market based on the complementary LNG benchmark to be developed by the EU Agency for the Cooperation of Energy Regulators (ACER).
• Engie Global Energy Management & Sales said on 14 November 2022 that it had won 30 TWh (2 million tonnes) per year of regasification capacity for 16 years at the Fos Cavaou LNG terminal.
• Germany's Niedersachsen Ports announced on 15 November 2022 the completion of the jetty for Germany's first FSRU-based LNG import facility in Wilhelmshaven.
• Denmark's gas system operator Energinet said on 1 November 2022 that the new Baltic Pipe pipeline between Norway and Poland received its first direct deliveries of Norwegian gas after a Danish terminal started operations.

 

Other regions

• Abu Dhabi National Oil Company (ADNOC) announced on 31 October 2022 that ADNOC and GAIL (India) Limited signed a Memorandum of Understanding to explore collaboration opportunities in LNG supply and decarbonisation. The agreement also includes potential optimization of LNG trading activities, the review of joint equity investments in renewables and the monitoring of greenhouse gasses for LNG cargoes, to support low carbon LNG supplies.
• QatarEnergy announced on 21 November 2022 that it had entered into a 27-year SPA with Sinopec for the supply of 4 million tonnes per year of LNG to China. The LNG volumes will be supplied from QatarEnergy's North Filed East (NFE) LNG expansion project. QatarEnergy has also concluded construction contracts and long-term time charter agreements for 60 LNG carriers as part of its LNG shipbuilding program in support of both the NFE and NFS expansion projects, with the number expected to grow to almost 100 in the future.
• QatarEnergy announced on 30 October 2022 that it had selected ConocoPhillips as its third and final international partner in the North Field South (NFS) expansion project. ConocoPhillips will have an effective net participating interest of 6.25% in the NFS project, out of a 25% interest available for international partners.
• NYK announced on 4 November 2022 that the joint-venture companies that NYK is a part of had signed a long-term time-charter contract with QatarEnergy for five LNG carriers. The joint-venture companies have also executed shipbuilding contracts for the five LNG carriers with Hudong-Zhonghua Shipbuilding (Group) Co., Ltd.
• Mitsui O.S.K. Lines, Ltd. (MOL) announced on 10 November 2022 that the company signed a long-term charter contract for three newbuilding LNG carriers with QatarEnergy on 24 October. The vessels will be built at Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. in China, and are scheduled for delivery in 2027. Earlier, MOL signed a long-term charter contract with QatarEnergy in April 2022 for four newbuilding LNG carriers.
• NewMed Energy and Uniper announced on 8 November 2022 that they had signed a non-binding MoU to explore ways of collaborating on the supply of LNG in the short- and long-term and producing blue and green hydrogen. The parties will look into the supply of natural gas from Israel to Germany in the immediate term using existing production and transmission infrastructure in line with the availability of the transmission pipeline between Israel and Egypt, where the natural gas will be delivered to LNG facilities, and from there to Germany. The MoU also includes potential collaboration in the field of blue hydrogen and green hydrogen and its transportation from Israel to Europe.
• JGC Holdings Corporation announced on 18 November 2022 that JGC Corporation in partnership with Technip Energies had been awarded the contract for the FEED of a FLNG facility project in Nigeria, pioneered by UTM FLNG Limited to produce 1.2 million tonnes per year of LNG, as well as LPG and condensate.
• Eni on behalf of its Area 4 Partners (ExxonMobil, CNPC, GALP, KOGAS and ENH) in Mozambique announced on 13 November 2022 that the first shipment of LNG produced from the Coral gas field, in the ultra-deep waters of the Rovuma Basin, had departed from Coral Sul FLNG facility. bp will purchase 100% of LNG output from Coral Sul FLNG which has the capacity to produce up to of 3.4 million tonnes of LNG per year.

 

（Note: CCS: Carbon Capture and Storage, EPC: Engineering, Procurement and Construction, FEED: Front-End Engineering Design, FID: Final Invest Decision, FLNG: Floating Liquified Natural Gas, FSRU: Floating Storage Regasification Unit, HOA: Heads of Agreement SPA: Sale and Purchase Agreement）

 

 

Supprted by the Institute of Energy Economics Japan (IEEJ)