Trend of Natural Gas and LNG Prices

Short-term trend

Asia

• The assessed spot LNG price for near-month delivery to Northeast Asia, JKM rose to late USD 12s per million Btu on 3 July on the back of higher European gas prices, but subsequently hovered around the USD 11s due to firm inventories and weak demand. The price then dropped to the late USD 10s on 13 July. The arrival of the heat wave in the region raised JKM to the USD 11s on 14 July, but it remained at the USD 10s thereafter. JKM rose to USD 11s again as LNG export facilities in the Asia-Pacific region were undergoing scheduled maintenance, and remained at the same level through 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 June 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 June 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 was USD 12.05 per million Btu and JPY 87,048 per tonne in June 2023, 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 9.28, USD 12.09, USD 12.65, and USD 11.61, respectively. Elsewhere in Northeast Asia, average import prices in June were USD 10.75 in China, USD 13.25 in Korea, and USD 10.08 in Chinese Taipei. Japan’s average landed crude oil import price (JCC: Japan crude cocktail) was USD 81.99 per barrel in June 2023. Japanese yen-denominated price stood at JPY 71,828 per kilolitre in June 2023. Japan’s average LNG import price, which accounts for approximately 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 June 2023, 22% lower than the same month in 2022. The total import volume during the first half of 2023 was 32.62 million tonnes, a decrease of 13% from the same period of 2022. China imported 5.96 million tonnes of LNG in June 2023, 26% higher than the same month in 2022. China’s total LNG import volume during the first half of 2023 was 33.44 million tonnes, an increase of 7% from the same period of the previous year, surpassing Japan. Japan's monthly LNG imports declined year-on-year for the fifth consecutive month, while China's increased for the fifth consecutive month. While Korea imported 2.94 million tonnes in June 2023, an increase of 17% from the same month of 2022, Chinese Taipei imported 1.51 million tonnes, 3% lower than one year earlier. LNG import volume in these four markets was 99.06 million tonnes during the first half of 2023, a 2% decrease year-on-year.

United States

• The Henry Hub Natural Gas Futures price fell continuously from USD 2.7 on 3 July to USD 2.6 on 7 July. With gas production and gas inventories firm despite summer demand, the HH price subsequently moved slightly to the late USD 2s and remained at the same level toward the end of the month.
• The U.S. Energy Information Administration (EIA) forecasts Henry Hub spot prices to rise in the coming months in its 11 July Short-Term Energy Outlook. The price prices will increase from an average of USD 2.40 in the first half of 2023 to an average of USD 2.80 in the second half of 2023, as the existing surplus in natural gas inventories shrinks compared to the five-year average due to lower natural gas production.

Europe

• The Dutch TTF Gas Futures price fell to USD 10.7 on 7 July, mainly due to the prospect of the completion of scheduled repairs at the Norwegian gas fields. The following week, the TTF fell from USD 9.7 on 10 July to USD 8.6 on 14 July on reports that the Norwegian Nyhamna gas processing facility was expected to resume operations. With rising temperatures in Europe, the TTF rose to USD 8.9 on 18 July, and further rose to USD 9.2 on 20 July on concerns of reduced output at a French nuclear power plant due to high river temperatures and planned maintenance. Amid the increased demand for gas-fired fuels due to the heat wave, TTF hit USD 10.7 on 25 July, but dropped the next day and further fell to USD 9.3 on 27 July , partly due to the easing of the heat wave.

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 hovering around USD 12s due to European gas prices fluctuations and other factors, but softened slightly in July to hover around USD 11s on the back of high inventories and low demand.
• 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 12.05 in June 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 March 2023 stood at 5.47 million tonnes, an increase of 1.8% and 0.10 million tonnes from February, and an increase of 45.6% from March 2022, higher than the past five-year average by 1.21 million tonnes.
• The LNG inventories for city-gas supply as of the end of March 2023 were 2.65 million tonnes, 6.4% higher than February and 69.0% higher than March 2022. LNG consumption for city-gas in March 2023 was 2.56 million tonnes, decreased by 13.3% year-on-year. City-gas companies received 2.70 million tonnes of LNG in March 2023, decreasing year-on-year by 9.2%.
• The LNG inventories for power generation as of the end of March 2023 were 2.82 million tonnes, decreasing by 2.2% from February and 28.9% higher than March 2022. LNG consumption for power generation in March 2023 was 2.99 million tonnes, decreasing by 13.8% from March 2022. Power generation companies received 3.32 million tonnes of LNG, decreasing year-on-year by 22.5%.
• According to the "LNG Inventory for Power Generation" released by the Ministry of Economy, Trade and Industry (METI) on 26 July 2023, major power utilities’ LNG inventories were 1.98 million tonnes as of 23 July. This is lower by 0.30 million tonnes than the end of July 2022 and 0.10 million tonnes below the average of the end of July of the past five years.

United States

• As of 14 July 2023, working gas in underground natural gas storage in the United States was 2.97 Tcf, 8.9% increase from the previous month, according to the U.S. Energy Information Administration (EIA). Gas inventories were 23.7% higher than those at the same time in 2022 and were 373.2 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 24 July 2023, the stored volume of natural gas in European underground storage facilities operated by the Aggregated Gas Storage Inventory (AGSI +) EU member companies was 948.2 TWh (about 62.73 million tonnes LNG equivalent). The volume was higher than that of one year ago by 27.9% or 206.9 TWh (about 13.69 million tonnes LNG equivalent). The inventories represented 84.0% of the capacity, which was higher than 66.7% on the same day in 2022 and higher than the five-year average of 68.8%. The inventories in Germany and the Netherlands (which have relatively large storage capacity among the member countries) were 86.0% and 86.7% of their respective capacities.

 

• As of 24 July 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 4.30 million cubic meters, 6.5% up from the previous month. The inventories were lower than the same day in 2022 by 7.4% and by 3.7% below the five-year average for the same day.

Latest Developments in Major Natural Gas and LNG Projects

Highlights

• In July 2023, the first FID on a large-scale LNG production project was announced for the latter half of the calendar year, adding capacity of 17.6 million tonnes per year.
• In the first half of 2023, the global ocean transported LNG volumes exceeded 200 million tonnes (up 2% year-on-year). Top LNG exporters were the United States, Australia, and Qatar, as in the same period of 2022, with the respective volumes from the three countries were close to each other. The fourth largest exporter, Russia, declined significantly by 9% year-on-year.

 

Asia and Oceania

• Pakistan LNG revealed on 20 June 2023 that it had failed to secure cargoes for October through December as no companies responded to its purchase tender.  Pakistan LNG published on 14 July 2023 an evaluation report of the latest LNG purchase tender. Trafigura was the only company to submit offers for a delivery on 3 - 4 January 2024 at a price of USD 23.4711/MBtu and 23 - 24 February 2024 at USD 22.4722. There were no offers for the delivery on 28 - 29 January 2024.
• Australia's Tamboran Resources Limited announced on 23 June 2023 that Tamboran had entered into two non-binding MOUs with BP Singapore Pte. Limited and Shell Eastern Trading (Pte) Ltd. regarding the potential purchase of LNG from Tamboran's proposed NTLNG project at Middle Arm. The two MOUs include volumes for bp and Shell to each purchase up to 2.2 million tonnes of LNG per year over 20 years.
• Vitol announced on 29 June 2023 that Vitol Asia Pte Ltd and the Merakes LNG Sellers had signed an SPA. This SPA represents the conclusion of an open tender process held in February 2023 by the Merakes LNG Sellers. The LNG supply to Vitol will commence in 2024. Quantity will be approximately 0.55 million tonnes per year for a period of 3 years on an FOB basis, with a possible one-year extension. The LNG will be produced and loaded at the Bontang LNG plant from feed gas produced from the Merakes field located in Indonesia.
• Viet Nam's PV GAS announced on 10 July 2023 that its Thị Vải LNG import terminal had received the first cargo from Shell.
• AES Vietnam announced on 12 July 2023 that Son Mỹ LNG Terminal Project Company, a joint venture of AES and PV GAS, was granted the Investment Policy Approval for its Son Mỹ LNG Terminal project by Bình Thuận People's Committee on 11 July. The terminal will have an installed capacity of 450 TBtu (8.72 million tonnes) and is expected to begin commercial operations in 2027.
• Korea Gas Corporation (KOGAS) and JERA launched an initiative of the "Coalition for LNG Emission Abatement toward Net-zero ("CLEAN")" on 18 July 2023. CLEAN is an initiative taken by LNG buyers, together with LNG producers, to reduce methane emissions in the LNG value chain. With the support of JOGMEC, the two companies will work to increase the visibility of methane emissions through dialogue with LNG producers, and to develop and disseminate best practices to reduce methane emissions.
• Tokyo Gas announced on 21 July 2023 that the company had made an investment decision on the LNG-fired thermal power station in Sodegaura, Chiba. The company plans to introduce a cutting-edge 1.95 GW high-efficiency, gas turbine combined cycle power generator capable of hydrogen co-firing and plans to launch operations successively starting from FY2029.

 

North America

• Cheniere Energy, Inc. announced on 21 June 2023 that Cheniere Marketing, LLC had entered into a long-term LNG SPA with Equinor ASA. Equinor has agreed to purchase 1.75 million tonnes per year of LNG from Cheniere Marketing on an FOB basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee. Delivery of half of the volume associated with the SPA will commence in 2027, and delivery of the remaining half, which is subject to, an FID on the first train of the Sabine Pass Liquefaction Expansion Project (SPL Expansion Project), will commence at the end of this decade. The term of the SPA is 15 years from the commencement of delivery of the full 1.75 million tonnes per year of LNG volumes.
• Venture Global LNG and SEFE (Securing Energy for Europe GmbH) announced on 22 June 2023 the execution of a long-term SPA. SEFE's subsidiary, WINGAS GmbH, will purchase 2.25 million tonnes per year of LNG from CP2 LNG, Venture Global's third project, for 20 years.
• Cheniere Energy, Inc. announced on 26 June 2023 that Cheniere Marketing, LLC had entered into a long-term LNG SPA with ENN LNG (Singapore) Pte. Ltd., a subsidiary of ENN Natural Gas Co., Ltd. ENN has agreed to purchase 1.8 million tonnes per year of LNG from Cheniere Marketing on an FOB basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee. Deliveries will commence in mid-2026, ramping to 0.9 million tonnes per year in 2027.
• The U.S. DOE (Department of Energy) granted a long-term license to Gulfstream LNG to export LNG to FTA nations from the proposed mid-sized greenfield liquefaction plant in Louisiana on 26 June 2023.
• Berkshire Hathaway Energy announced on 10 July 2023 that it had executed an agreement to purchase Dominion Energy's 50% limited partnership stake in the Cove Point LNG, LP business.
• Centrica and Delfin Midstream Inc. announced on 11 July 2023 a long-term SPA for 1 million tonnes per year of LNG for 15-years on an FOB basis at the Delfin Deepwater Port off the coast of Louisiana.
• NextDecade Corporation announced on 12 July 2023 an FID to construct the first three liquefaction trains (Phase 1) at the company's 27 million tonne per year Rio Grande LNG (RGLNG) export facility.
• Energy Transfer LP announced on 12 July 2023 that the company had entered into three non-binding HOAs related to long-term LNG offtake from its Lake Charles LNG project for an aggregate of 3.6 million tonnes per year. One of the HOAs specifies that a Japanese consortium would purchase 1.6 million tonnes per year for a 20-year term, subject to an option to convert the offtake arrangement to an equity participation providing for the same volume of LNG.
• Canada's Ksi Lisims LNG announced on 13 July 2023 that the company had received its Process Order from the B.C. Environmental Assessment Office (BCEAO) and was clear to complete a full application for an environmental assessment certificate.
• Mexico Pacific Limited announced on 5 July 2023 that the company and China's Zhejiang Energy International Limited had signed an SPA for 1 million tonnes per year of LNG on an FOB basis over 20 years from Mexico Pacific's Saguaro Energía LNG export facility.
• Mexico Pacific announced on 18 July 2023 the consolidation of the strategic alliance between Mexico Pacific and CFE for the construction of the Saguaro Energía LNG export project. Under the 20-year agreement, CFE will supply Mexico Pacific with natural gas delivered from the Permian Basin into Mexico Pacific's pipeline in the United States and via CFE's pipelines in Mexico. The Government of the State of Sonora and Mexico Pacific announced on 20 July signed a collaboration agreement supporting the latter’s Saguaro Energia project.

 

European and surrounding regions

• Germany's Deutsche ReGas announced on 21 June 2023 that the company had signed an agreement with the Federal Republic Germany about the FSRU TRANSGAS POWER for the planned LNG terminal in Mukran.
• Romania's OMV Petrom and Romgaz announced on 21 June 2023 that the two companies had made an FID for the 8 bcm per year Neptun Deep gas project located in the Black Sea. The partners said that they would invest up to €4 billion and expected first gas in 2027.
• The Netherlands government announced on 23 June 2023 that gas extraction from the Groningen field would stop as of 1 October 2023. The cabinet has been phasing out gas extraction since 2018.
• Eni S.p.A. announced on 23 June 2023 that along with Vår Energi ASA Eni had reached an agreement to acquire Neptune Energy Group Limited. Neptune is a leading independent exploration and production company with a world-class portfolio of gas-oriented assets and operations in Western Europe, North Africa, Indonesia and Australia.
• Enagás announced on 01 July 2023 that the LNG terminal of El Musel, in Gijón, Spain, had received its first ship. Enagás also announced on 11 July that Endesa was the winner of the recent capacity allocation process for logistics services at the terminal.
• Fluxys Belgium announced on 13 July 2023 that from October 2023, a single index, ZTP, would be used for the Belgian reference price to merge the two existing gas trading services "ZTP notional" and "ZTP physical" to reflect the changed dynamics on the wholesale market, and to simplify and increase liquidity.
• The European Commission announced on 18 July 2023 that the EU and Japan had reached a consensus to strengthen their energy cooperation by establishing an energy security dialogue on global LNG architecture. The dialogue will focus on three pillars: global security of supply, transparency of markets and reduction of methane emissions in the LNG supply chain, reinforcing the strategic energy partnership.

 

Other regions

• QatarEnergy announced on 20 June 2023 that QatarEnergy had signed agreements with CNPC, covering the long-term supply of LNG to China and partnership in the North Field East LNG expansion project (NFE). The two parties signed an LNG SPA for the delivery of 4 million tonnes of LNG per year from the NFE project to CNPC's receiving terminals in China over 27 years, marking the industry's longest term SPA commitment. The two parties also signed a share sale and purchase agreement pursuant to which QatarEnergy will transfer to CNPC a 5% interest in the equivalent of one NFE train with a capacity of 8 million tonnes per year.
• Qatar's Minister of State for Energy Affairs, the President and CEO of QatarEnergy, said on 12 July 2023 "40% of all the new LNG that will come to the market by 2029, when all our projects are up and running, is going to be from QatarEnergy." He also gave an overview of QatarEnergy's efforts to provide cleaner energy it needs for a responsible energy transition. "Qatar has the largest sequestration site in the MENA region. We are injecting more than 2 million tonnes per year of sequestered CO2, and we are going to go to 11 million tonnes per year in a few years. We are using solar power to power some of our new LNG production. Qatar's LNG carbon intensity is probably the lowest in the world."
• Oman's official news agency reported on 20 June 2023 that OQ Trading Limited (OQT) had signed a new LNG SPA with Bangladesh's Petrobangla. OQT will deliver between 0.25 million tonnes to 1.5 million tonnes of LNG per year from OQT's global portfolio, adding to the 1.0 million tonnes per year contracted in the initial SPA signed in May 2018. The new SPA is set to last until 2035.
• TotalEnergies announced on 10 July 2023 that the company and Algeria's SONATRACH signed several agreements to strengthen the cooperation between the two companies in the production of natural gas in Algeria, the delivery of LNG to Europe, as well as the development of renewables in Algeria. Among them the two companies have extended for the year 2024 deliveries by SONATRACH of 2 million tonnes per year of LNG to TotalEnergies at the port of Fos-Cavaou, France.
• McDermott announced on 12 July 2023 that the company had secured a major contract from Qatargas Operating Company Limited to deliver EPCI for the North Field Production Sustainability (NFPS) Offshore Fuel Gas Pipeline and Subsea Cables Project, COMP1.

 

(Note: bcm: billion cubic metre, CCS: Carbon Capture and Storage, DES: delivered ex-ship, EPC: Engineering, Procurement and Construction, EPCI: Engineering, Procurement, Construction and Installation, 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)