Trend of Natural Gas and LNG Prices

Short-term trend

Asia

• The assessed spot LNG price for near-month delivery to Northeast Asia, JKM fell below USD 10 per million Btu on 5 May amid high LNG inventories and weak demand. JKM subsequently rallied as buying was seen from Thailand, Taiwan, and other countries, and remained in the low USD 10s, but then began to decline again, hitting a low of USD 9s on 16 May, the lowest level again since May 2021. JKM is hovering in the late USD 9s toward the end of the month. Falling LNG spot prices have restored purchasing power in Bangladesh and other countries.
• 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 April 2023 and scheduled to be delivered from the month onward (contract-based price) was not disclosed. The average price of spot LNG cargoes that were contracted and delivered in Japan within the month (arrival-based price) was not disclosed.
• 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 13.59 per million Btu and JPY 93,155 per tonne in April 2023, although the figures were lower than those in the previous month and under JPY 100 thousand for the first time since March 2022. The average landed prices of LNG in Japan from the United States, the ASEAN region, the Middle East, and Russia in April were USD 10.37, USD 12.35, USD 13.20, and USD 13.94, respectively. Elsewhere in Northeast Asia, average import prices in April were USD 11.79 in China, USD 13.46 in Korea, and USD 11.13 in Chinese Taipei. Japan’s average landed crude oil import price (JCC: Japan crude cocktail) was USD 83.42 per barrel in April 2023, declining for ten months in a row. Japanese yen-denominated price stood at JPY 69,357 per kilolitre in April 2023. 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, as well as recent weak spot LNG prices.
• Japan imported 4.53 million tonnes of LNG in April 2023, 19% lower than the same month in 2022. The total import volume during the first four months of 2023 was 23.47 million tonnes, a decrease of 10% from the same period of 2022. China imported 4.77 million tonnes of LNG in April 2023, 10% higher than the same month in 2022 and larger than those of Japan for the first time in 2023. China’s total LNG import volume during the first four months of 2023 was 21.16 million tonnes, a decrease of 2% from the same period of the previous year. While Korea imported 3.16 million tonnes in April 2023, a decrease of 8% from the same month of 2022, Chinese Taipei imported 1.73 million tonnes, 16% higher than one year earlier. LNG import volume in these four markets was 68.48 million tonnes during the first four months of 2023, a 4% decrease year-on-year.

United States

• The Henry Hub Natural Gas Futures price was in the low USD 2s amid firm gas production and limited demand. HH slightly fluctuated due to a temporary decrease in feed gas supply to LNG liquefaction terminals, but the impact was minor. Natural gas inventories are also strong compared to the previous year and the average of the past 5 years, keeping prices under control. HH is hovering in the low USD 2s toward the end of the month.
• The U.S. Energy Information Administration (EIA) in its Short-Term Energy Outlook released on 9 May, forecasts an average natural gas spot price of USD 2.35 for May 2023, and an average of around USD 3.00 for July and August, when electricity demand peaks. For the full-year averages of 2023 and 2024, the forecasts are USD 2.91 and USD 3.72, respectively.

Europe

• The Dutch TTF Gas Futures price fell from USD 12.5 on 1 May to USD 9.6 on 19 May, following a downward trend due to abundant supplies, mild weather, and high levels of underground gas storage. An unplanned outage occurred at Hammerfest LNG in Norway, but the impact on prices was minor. TTF is hovering in the high USD 9s toward the end of the month.

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 downward trend as TTF declined, falling to the high USD 30s, and generally hovering in the high USD 20s during October and November. In December, the market was active during the year-end procurement season and JKM hovered around the USD 30s. In January 2023, trading resumed but was sluggish, with a downward trend from USD 20s, and a further decline to around USD 9s in May.
• 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 mid-USD 9s in February 2021, after falling to the mid-USD 7s in March. It had then been on the largely constant rise for the following 18 months to the highest ever at USD 22.73 in September 2022 along with the rise of crude oil prices until June 2022. Japan’s average LNG import price declined to USD 13.59 in April 2023, following the declining oil prices from July 2022.

Trend of Natural Gas and LNG Inventories

Japan

• Japan's LNG inventories as of the end of January 2023 stood at 5.25 million tonnes, a decrease of 5.2% and 0.29 million tonnes from December, and an increase of 34.4% from January 2022, higher than the past five-year average by 0.97 million tonnes.
• The LNG inventories for city-gas supply as of the end of January 2023 were 2.34 million tonnes, 13.5% lower than December and 31.2% higher than January 2022. LNG consumption for city-gas in January 2023 was 3.26 million tonnes, increased by 7.0% year-on-year. City-gas companies received 2.90 million tonnes of LNG in January 2023, decreasing year-on-year by 5.0%.
• The LNG inventories for power generation as of the end of January 2023 were 2.92 million tonnes, increasing by 2.7% from December and 37.0% higher than January 2022. LNG consumption for power generation in January 2023 was 3.76 million tonnes, decreasing by 18.3% from January 2022. Power generation companies received 4.36 million tonnes of LNG, decreasing year-on-year by 3.0%.
• According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 17 May 2023, major power utilities’ LNG inventories were 2.67 million tonnes as of 14 May. This is higher by 0.56 million tonnes than the end of May 2022 and 0.66 million tonnes above the average of the end of May of the past five years.

United States

• As of 12 May 2023, working gas in underground natural gas storage in the United States was 2.24 Tcf, 16.1% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 29.3% higher than those at the same time in 2022 and were 365.2 Bcf higher than the past five-year average. The latest inventories have been within the past five-year range since November 2020.

Europe

• As of 21 May 2023, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) EU member companies was 745.0 TWh (about 49.28 million tonnes LNG equivalent). The volume was higher than that of one year ago by 57.6% or 272.3 TWh (about 18.01 million tonnes LNG equivalent). The inventories represented 65.9% of the capacity, which was higher than 42.8% on the same day in 2022 and higher than the five-year average of 46.5%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 72.3% and 66.2% of their respective capacities.

 

• As of 21 May 2023, 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 5.20 million cubic meters, 3.0% up from the previous month. The inventories were higher than the same day in 2022 by 7.3% and by 10.3% above the five-year average for the same day.

Latest Developments in Major Natural Gas and LNG Projects

Highlights

• While both Asian spot LNG and European spot gas prices have been more than 60% lower than those at the end of last year, LNG import projects in the emerging Asian markets are advancing. The Philippines' first FSU has arrived at its planned site, to be followed by another FSRU expected to be delivered around the middle of the year. PetroVietnam Gas has secured a certificate from Vietnam's Ministry of Industry and Trade to import and export LNG, as the company has completed the construction of its LNG terminal with an initial capacity of 1 million tonnes per year. Hong Kong has received its first LNG cargo.

 

Asia and Oceania

• AG&P International Pte. Ltd. (AG&P) announced on 27 April 2023 the arrival and berthing of its long-term chartered FSU at AG&P's Philippines LNG Import Terminal in Batangas Bay.
• Singapore's Pavilion Energy announced on 16 May 2023 that the company had taken delivery of its first LNG cargo paired with a Statement of Greenhouse Gas Emissions (SGE) from QatarEnergy at the Singapore LNG Terminal.
• PetroChina International Co Ltd announced on 27 April 2023 that it had signed an SPA with Malaysia's Petronas to buy LNG, as the pair's first term LNG SPA.
• PetroVietnam Gas announced on 8 May 2023 that it had received a certificate from the Ministry of Industry and Trade to become the country's first company to import and export LNG in 2023. PetroVietnam Gas said it had completed the construction of its Thị Vai LNG terminal with an initial capacity of 1 million tonnes per year. It aims to raise the capacity to 3 million tonnes.
• JERA announced on 27 April 2023 that JERA, through its subsidiary JERA Asia Pte. Ltd. concluded an MOU with Summit Corporation Limited, a subsidiary company of Summit Power International Limited, the largest independent power producer in Bangladesh to collaborate on the development of LNG supply, storage and regasification and LNG.
• Australia's South Australian LNG import terminal developer, Venice Energy announced on 4 May 2023 that a joint study with SEA Gas, the owners of the ~680 km pipeline between Victoria and South Australia, had confirmed the pipeline could be reconfigured to facilitate bi-directional flow between the states when the proposed LNG terminal in the Outer Harbor at Port Adelaide becomes operational in 2026.
• The Australian Government announced on 7 May 2023 that it would introduce changes to the Petroleum Resource Rent Tax (PRRT). The Government will introduce a cap on the use of deductions from 1 July 2023 targeting the offshore LNG projects. Specifically, the change will limit the proportion of PRRT assessable income that can be offset by deductions to 90%. The change will bring forward PRRT revenue from LNG projects.
• Shell announced on 29 April 2023 that Shell Australia had signed an agreement with bp for the sale of Shell's interests in the Browse Project.
• Santos announced on 3 May 2023 that it had signed four MOUs for the proposed storage of CO2 emissions from third parties to underpin the initial development of the Bayu-Undan CCS project, where FEED is nearing completion.
• Santos announced on 1 May 2023 that Kumul Petroleum Holdings Limited (Kumul) had extended the offer period to acquire a 5% interest in PNG LNG until 31 August 2023, after the binding conditional offer was originally made on 27 September 2022 and an extension was made on 23 December 2022 until 30 April 2023.
• Indonesian engineering company PT Tripatra Engineers and Constructors (TRIPATRA) announced on 3 May 2023 that the company, partnering with PT Saipem Indonesia and Korea's Daewoo Engineering & Construction Co., Ltd., had been awarded the FEED contract for the upstream facilities of the PNG LNG project.

 

North America

• Cheniere Energy announced on 16 May 2023 that Cheniere Marketing International LLP, had entered into a long-term LNG SPA with Korea Southern Power Co. Ltd (KOSPO). KOSPO has agreed to purchase approximately 0.4 million tonnes per year of LNG from Cheniere Marketing on a DES basis from 2027 through 2046, with a smaller annual quantity to be delivered starting in 2024. The volumes from 2028 through 2046 are subject to an FID with respect to the first train of the Sabine Pass Liquefaction Expansion Project.
• Cheniere Energy Inc. announced on 2 May 2023 its first-quarter 2023 net income of USD 5.4 billion, as compared to approximately its net loss of USD 865 million in the corresponding 2022 period.
• JERA and Venture Global CP2 LNG, LLC announced on 28 April 2023 that they had signed an SPA. JERA will purchase 1.0 million tonnes per year of LNG from the CP2 project, from the commencement of commercial operation of the project for 20 years.
• U.S. DOE approved on 21 April 2023 a request from a Sempra affiliate to extend the export deadline for the Port Arthur LNG facility. The order was consistent with another from the Federal Energy Regulatory Commission that extended the project's construction and in-service deadlines.
• Air Products announced on 1 May 2023 that it had signed an agreement with Bechtel Energy Inc. to provide its proprietary LNG process technology, equipment and advisory services to Sempra Infrastructure's Port Arthur LNG Phase 1 project in Texas.
• U.S. DOE denied on 21 April 2023 Energy Transfer's request to again extend the deadline for starting exports from its proposed Lake Charles LNG facility in Louisiana. DOE reaffirmed its expectations that LNG projects should be able to start exporting within seven years of export authorization.
• Delfin Midstream Inc. announced on 24 April 2023 that Delfin LNG LLC had finalized a binding SPA with Hartree Partners Power & Gas Company (UK) Limited, a wholly owned subsidiary of Hartree Partners, LP. Delfin LNG will supply 0.6 million tonnes per year on an FOB basis at the Delfin Deepwater Port to Hartree for 20 years. The SPA is indexed to the Henry Hub benchmark.
• The LNG Canada project announced on 4 May 2023 that the project had taken delivery of its last large modules. The piece of equipment will be used to operate one of four refrigerant compressors at the LNG export facility in Kitimat. With construction more than 80% complete overall, the project said it was getting ready to commission, start-up and operate.
• New Fortress Energy (NFE) on 4 May 2023 confirmed in its financial results for the first quarter of 2023 that its first Fast LNG project would begin commercial operations in August as construction of the first Fast LNG unit was 90%+ complete and deployment to Altamira is expected in June. The company also recently signed a non-binding Letter of Intent with Mexico's CFE to explore installing FLNG 2 and FLNG 3 at an underutilized existing onshore terminal in Altamira. NFE said deployment and ready for installation were expected in the second half of 2024.

 

European and surrounding regions

• The European Commission announced on 10 May 2023 that it had launched the first international tender for joint purchasing of EU gas supplies through the AggregateEU mechanism. The Commission further announced on 16 May that the EU attracted in the tender bids from 25 supplying companies equivalent to more than 13.4 bcm - surpassing the aggregated demand. The international suppliers have already been matched with the European customers, amounting to an overall volume of 10.9 bcm. This covers 8.7 bcm of gas via pipeline and 2.2 bcm of LNG (1.62 million tonnes).
• Hanseatic Energy Hub announced on 25 April 2023 that EnBW had booked additional import rights of 3 bcm per year on a long-term basis via the Hanseatic Energy Hub in Stade doubling its future import capacity on the Elbe. All bookings include the option to move to ammonia as a hydrogen-based energy source at a later date.

 

Other regions

• ADNOC announced on 2 May 2023 that its low-carbon LNG project would move forward in the Al Ruwais Industrial City, Al Dhafrah, Abu Dhabi. ADNOC intends to more than double its LNG production capacity. The plant, which is designed with electric-powered processing facilities, will run on renewable and nuclear grid power.
• QatarEnergy announced on 16 May 2023 the award of the EPC contract with a joint venture of Technip Energies and Consolidated Contractors Company (CCC) for the North Field South (NFS) project, which comprises two LNG mega trains with a combined capacity of 16 million tonnes per year.
• NNPC (Nigerian National Petroleum Corporation) said on 27 April 2023 that NNPC had signed an MoU with Golar LNG to build a FLNG plant in Nigeria.
• Eni announced on 25 April 2023 that the foundation stone of Congo LNG was laid. The project is expected to reach an overall LNG production capacity of 3 million tonnes per year from 2025. Congo LNG will exploit the gas resources of Marine XII, fulfilling the country's power generation needs while also fuelling LNG exports focusing on Europe.
• Representatives of Equinor and Shell announced on 19 May 2023 that negotiations on key agreements on the Tanzania LNG project between the international energy companies (IECs) and the Tanzanian government had been concluded. The next steps involve a period of time of detailed engineering design work.

 

(Note: bcm: billion cubic metre, CCS: Carbon Capture and Storage, DES: delivered ex-ship, EPC: Engineering, Procurement and Construction, FEED: Front-End Engineering Design, FID: Final Invest Decision, FLNG: Floating Liquified Natural Gas, FOB: free-on-board, FSRU: Floating Storage and Regasification Unit, FSU: Floating Storage Unit, HOA: Heads of Agreement, MOU: Memorandum of Understanding, SPA: Sale and Purchase Agreement)

 

 

Supprted by the Institute of Energy Economics Japan (IEEJ)