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 initially in the low USD 8s per million Btu, but was raised to the USD 9s supported by buying interest from China and India. JKM rallied on fears of tighter supply following the announcement of extended maintenance at Norwegian gas processing plants and other facilities, reaching the mid-USD 13s on 15 June. JKM fell on the back of high inventories and weak demand in Northeast Asia, dropping to late USD 11s on 19 June. Then on 21 June, it rose to USD 13 on strong buying by traders amid volatile European gas prices, but fell to mid USD 12s the next day on weak demand due to high inventories in Japan and Korea, and further down to late USD 11s on 23 June.
• 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 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 delivered in Japan in May 2023 (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 12.75 per million Btu and JPY 89,461 per tonne in May 2023, although the figures were lower than those in the previous month. The average landed prices of LNG in Japan from the United States, the ASEAN region, the Middle East, and Russia in May were USD 10.78, USD 11.80, USD 14.04, and USD 13.07, respectively. Elsewhere in Northeast Asia, average import prices in May were USD 11.43 in China, USD 13.05 in Korea, and USD 10.49 in Chinese Taipei. Japan’s average landed crude oil import price (JCC: Japan crude cocktail) was USD 86.37 per barrel in May 2023, declining for 11 months in a row. Japanese yen-denominated price stood at JPY 73,507 per kilolitre in May 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 4.61 million tonnes of LNG in May 2023, 20% lower than the same month in 2022. The total import volume during the first five months of 2023 was 28.09 million tonnes, a decrease of 12% from the same period of 2022. China imported 6.41 million tonnes of LNG in May 2023, 31% higher than the same month in 2022. China’s total LNG import volume during the first five months of 2023 was 27.54 million tonnes, an increase of 4% from the same period of the previous year. Japan's monthly LNG imports declined year-on-year for the fourth consecutive month, while China's increased for the fourth consecutive month. While Korea imported 3.12 million tonnes in May 2023, a decrease of 8% from the same month of 2022, Chinese Taipei imported 1.60 million tonnes, 10% lower than one year earlier. LNG import volume in these four markets was 84.19 million tonnes during the first five months of 2023, a 3% decrease year-on-year.

United States

• The Henry Hub Natural Gas Futures price was in the low USD 2s, but increased slightly due to forecasts of higher summer temperatures and other factors, and has remained in the mid USD 2s since mid-June. Maintenance temporarily reduced feed gas supply to an LNG liquefaction terminal, but the impact on HH was negligible. Natural gas inventories also remained steady compared to the previous year and the average of the past five years.
• The U.S. Energy Information Administration (EIA) forecasts an average natural gas spot price of USD 2.90 for the second half of 2023 in its Short-Term Energy Outlook released on 6 June. Natural gas prices are expected to rise throughout the summer as production declines slightly and air conditioning demand increases natural gas use in the power sector, according to the report. For the full year of 2024, the EIA forecasts an average price of USD 3.40, nearly 30% higher than in 2023.

Europe

• The Dutch TTF Gas Futures price surged from the USD 7s to USD 8.9 on 5 June due to the shutdown of several gas-related facilities in Norway and other factors. It returned to its previous level of USD 7.8 the following day, but rose again to USD 10.1 on 9 June following the announcement of extended maintenance at LNG export facilities and other gas-related facilities in Norway. The following week, TTF rose to USD 13.0 on 15 June due to the announcement of deferred maintenance completion at other gas-related facilities, but the next day the price dropped to USD 11.3. The price continued to fluctuate, and as of 23 June, TTF stood at USD 10.4.

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. In June 2023, JKM was fluctuating and rising under the influence of European gas prices, hovering around USD 12 toward the end of the month.
• 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 12.75 in May 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 February 2023 stood at 5.37 million tonnes, an increase of 2.3% and 0.12 million tonnes from January, and an increase of 51.6% from February 2022, higher than the past five-year average by 1.03 million tonnes.
• The LNG inventories for city-gas supply as of the end of February 2023 were 2.49 million tonnes, 6.7% higher than January and 67.7% higher than February 2022. LNG consumption for city-gas in February 2023 was 3.00 million tonnes, decreased by 9.0% year-on-year. City-gas companies received 3.16 million tonnes of LNG in February 2023, increasing year-on-year by 5.4%.
• The LNG inventories for power generation as of the end of February 2023 were 2.88 million tonnes, decreasing by 1.3% from January and 40.0% higher than February 2022. LNG consumption for power generation in February 2023 was 3.36 million tonnes, decreasing by 18.1% from February 2022. Power generation companies received 3.80 million tonnes of LNG, decreasing year-on-year by 16.1%.
• According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 21 June 2023, major power utilities’ LNG inventories were 2.37 million tonnes as of 18 June. This is higher by 0.23 million tonnes than the end of June 2022 and 0.42 million tonnes above the average of the end of June of the past five years.

United States

• As of 16 June 2023, working gas in underground natural gas storage in the United States was 2.73 Tcf, 16.8% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 25.8% higher than those at the same time in 2022 and were 389.2 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 June 2023, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) EU member companies was 845.4 TWh (about 55.92 million tonnes LNG equivalent). The volume was higher than that of one year ago by 37.7% or 231.6 TWh (about 15.32 million tonnes LNG equivalent). The inventories represented 75.1% of the capacity, which was higher than 55.3% on the same day in 2022 and higher than the five-year average of 58.0%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 79.1% and 75.6% of their respective capacities.

 

• As of 21 June 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 4.25 million cubic meters, 18.3% down from the previous month. The inventories were lower than the same day in 2022 by 3.0% and by 5.3% below the five-year average for the same day.

Latest Developments in Major Natural Gas and LNG Projects

Highlights

• While some progresses and setbacks have been observed among the LNG production projects under development, new LNG production projects have emerged in the United States and Australia. Although most existing LNG production plants are operating relatively smoothly, there have been some unplanned outages. With some planned maintenance programs ahead, resuming production and shipment as planned without any problems will lead to a stable balance of market supply and demand in the next winter in the Northern Hemisphere.

 

Asia and Oceania

• Vietnam Gas Corporation (PV GAS) announced on 24 May 2023 that it signed a Confirmation Notice with Shell on 22 May to deliver the first LNG cargo to Vietnam. The Thị Vải LNG terminal will be the first LNG terminal in Vietnam, with a capacity of Phase 1 of 1 million tonnes per year, to be expanded later to 3 - 6 million tonnes per year.
• bp announced on 31 May 2023 that the company had signed a joint venture agreement with Zhejiang Energy Gas to establish a company to supply and sell LNG via trucks. bp said that this was the first cooperation between the two firms and bp's third marketing and sales venture in China for trucked LNG.
• JX Nippon Oil & Gas Exploration Corporation announced on 2 June 2023 that its subsidiary had concluded a Farm-in Agreement with a subsidiary of TotalEnergies SE, in respect of a 2.58% (Pre-Papua New Guinea State Back-In) participating interest in PRL15 (Papua LNG project) in Papua New Guinea. Papua LNG partners are targeting to achieve an FID by the end of 2023 or early 2024 with a target of first LNG cargo by the end of 2027 or early 2028.
• Sembcorp Industries announced on 5 June 2023 that Sembcorp Gas Pte Ltd had signed a Gas Sales Agreement with a subsidiary of PT Medco Energi Internasional Tbk, to import natural gas piped from the West Natuna gas fields in Indonesia. The GSA is expected to be effective by the second half of 2023. Delivery is expected to commence from 2024 for four years.
• Chevron Australia announced on 6 June 2023 the production of first gas from the Gorgon Stage Two development off the northwest coast of Western Australia.
• Australia's Tamboran Resources announced on 9 June 2023 that it had secured land for a proposed 6.6 million tonnes per year liquefaction plant in the Northern Territory (Northern Territory LNG (NTLNG) project) which would be supplied with feedgas from the Beetaloo Basin. Tamboran aims to sanction the proposed LNG development by 2026, with first volumes expected by 2030.
• Brunei LNG revealed on 12 June 2023 that it had experienced an unexpected plant shutdown.
• Pakistan LNG Limited (PLL) published on 13 June 2023 calls for two LNG tenders for a total of nine cargoes to be delivered from October 2023 to February 2024. In July and August 2022 PLL tender seeking cargoes failed to attract bids.
• Mitsui O.S.K. Lines, Ltd. announced on 14 June 2023 that the MOL FSRU Challenger owned by its subsidiary had received the first LNG for Hong Kong in a commissioning process for an LNG import project.

 

North America

• Grand Isle LNG announced on 1 June 2023 its plan of LNG export facility in Plaquemines Parish, Louisiana. Grand Isle LNG expects to start delivering in 2026 and will include two 2.1 million tonnes per year liquefaction platforms.
• New Fortress Energy announced on 2 June 2023 that it had received an export permit for its Altamira Fast LNG facility from Mexico's Ministry of Energy. NFE is authorized to export up to 7.8 million tonnes through April 2028. Operations are slated to begin in the third quarter of 2023.
• Mitsui O.S.K. Lines announced on 9 June 2023 that it had entered into a strategic investment agreement with Delfin Midstream Inc. which develops an FLNG project.
• NextDecade Corporation and TotalEnergies announced on 14 June 2023 that the two companies and Global Infrastructure Partners (GIP) had entered into framework agreements whereby GIP would become a majority investor in Phase 1 of the Rio Grande LNG project, and TotalEnergies would become a 16.67% investor. An FID of the first phase of RGLNG is expected in the coming weeks for start-up in 2027.

 

European and surrounding regions

• Gate terminal B.V, a joint venture of Vopak and Gasunie, announced on 25 May 2023 that bp and PetroChina International London Co., Ltd would each separately acquire 2 Bcm per year of regassification and corresponding storage capacity for 20 years. The parties will continue to closely cooperate with a target of achieving FID by September 2023 and a start of commercial operations by the third quarter of 2026.
• Italy's OLT Offshore LNG Toscana announced on 31 May 2023 that it had received authorization to increase its annual regasification capacity from the current 3.75 Bcm to 5 Bcm per year from the relevant authorities.
• Israel’s NewMed Energy announced on 31 May 2023 that it had submitted with partners Chevron and Shell a development plan of the offshore Aphrodite natural gas field to the Cypriot government. The field in Cypriot waters will be connected to an existing processing and production facility in Egypt via a subsea pipeline, it said.
• Spain's Enagás announced on 1 June 2023 that it had joined the Germany's Hanseatic Energy Hub (HEH) consortium which is developing a proposed onshore LNG terminal in Stade. Enagás replaces Belgium's Fluxys as strategic partner in the LNG project and also appears to have taken over as the operator. Enagás said it will join HEH - a consortium comprising the Hamburg Buss Group, the Partners Group and industrial partner Dow - and that it will own a 10% stake.
• Norway's Equinor announced on 1 June 2023 that the gas leak at the Hammerfest LNG plant had been stopped. The leak occurred on 31 May in connection with a valve in one of the plant's cooling circuits. The plant was then suspended again due to trouble, but resumed operations on 14 June.
• National Grid's Grain LNG in the United Kingdom announced on 14 June 2023 the launch of a market consultation for the auction of 375 GWh/d (approximately 9 million tonnes per year) of existing capacity. The terminal this time offers three lots of capacity and 125GWh/d (approximately 3 million tonnes per year) of regasification capacity from as early as January 2029.

 

Other regions

• QatarEnergy announced on 1 June 2023 that QatarEnergy Trading had entered into a long-term LNG SPA with Petrobangla to supply about 1.8 million tonnes per year of LNG to Bangladesh for 15 years, starting in 2026. Qatar currently delivers more than 3.5 million tonnes per year of LNG to Bangladesh.
• According to Golar LNG, FLNG Gimi, which is part of the Greater Greater Tortue Ahmeyim LNG project, s 94% technically complete. The yard departure date for the FLNG has been postponed from 1H 2023 to Q3 2023.

 

(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)