LNG

Japanese liquefied natural gas imports plunged by more than 20 percent in June from the same month last year while half-year imports fell 13 percent with more competition coming from thermal coal and nuclear and more gas storage being built earlier in 2023 as prices declined.

Japan has formally retaken from China its position as the World No. 1 LNG importer with more volumes coming from Australia, Russia and its Asian neighbours even as overall deliveries to Japanese terminals fell in 2022 and slumped in December.

Technip Energies, the French-listed energy and LNG engineering company, said it was awarded a contract by a unit of Thailand’s national energy company for a gas plant near the Malaysian LNG export facilities at Bintulu in the state of Sarawak.

Japanese liquefied natural gas imports increased for a second successive month in May as they rose by 16.3 percent and Russian deliveries were twice as much as those from the US.

Shipments of LNG to Japan amounted to 5.76 million tonnes last month, or 85 cargoes, compared with 4.95MT, or 73 cargoes, in May 2021, according to the preliminary trade figures from the Japanese Ministry of Finance.

Japanese LNG deliveries to the network of 37 terminals around the main islands had been 5.57MT in April, or 82 cargoes, compared with 4.97MT, or 73 cargoes, in April 2021.

LNG costs for the nation last month surged year-on-year by 155 percent to 601.40Bln yen ($4.47Bln) compared with 236.15 Bln yen ($1.76Bln) in May 2021.

Yen plunge

The effect on the balance of payments was even more severe as the Japanese yen has dropped to a 24-year low against the dollar, meaning dollar-based commodities like energy are more expensive when converted back into yen.

The country lost the No. 1 LNG import position in 2021 to China, though in certain weeks in May and June Japan has been the biggest North Asia importer as China reduced shipments amid Covid-19 lockdowns.

Shipments to Chinese terminals in 2021 had amounted to 78.93MT which was 18.3 percent more than in 2020.

Japan’s 2021 cargo deliveries were 74.31MT, down 0.2 percent on 2020 and 4.62MT less that the Chinese total for 2021.

Thermal coal shipments also increased in May to 8.54MT at the nation’s coal terminals, a rise of 7.1 percent year-on-year.

On a fiscal year basis, Japanese LNG imports had dropped in the April 2021 to March 2022 period by 6.4 percent to 71.46MT versus 76.35Mt in the previous fiscal year, according to Ministry statistics.

Russian deliveries

During May 2022 shipments of LNG from Russia declined by 5.4 percent to 559,000 tonnes, though were higher than April’s 396,000 tonnes of deliveries. The shipments come frm the Gazprom-run Sakhalin plant in the Russian Far East.

They were also more than double the amount of shipments imported from the US, which dropped by more than 51 percent to 267,000 tonnes.

Imports from the US had dropped in April by 12 percent to 344,000 tonnes as the Russian invasion caused Asia-bound shipments to be re-directed to Europe.

Middle East cargo deliveries from nations like Qatar were down by 16 percent last month to 545,000 tonnes.

Shipments of LNG to Japan in May from Asian countries surged by 56.7 percent to 1.36MT, though were down on the 1.49MT received in April 2022.

The balance of imports in May 2022 came from Australia, African nations and the spot market.

That segment of the imports was higher at 3.03MT versus the 2.30MT received in May 2021 and up on the 2.95MT delivered in April.

Thermal coal shipments to Japanese ports in the fiscal year to the end of March 2022 had increased by 8.8 percent to 114.46MT, outpacing the LNG volumes of 71.46MT during the same period.

The almost parity levels between thermal coal imports and LNG shipments disappeared in 2021 with thermal coal deliveries moving well ahead.

Nuclear power generation in Japan is still well down. Nine reactors from a total of 16 plants with 50-plus reactors are operating from those that have gained the regulatory safety agreements.

French major TotalEnergies and North American US LNG plant owner and developer Sempra are expanding their strategic alliance with the signing of an accord covering the Vista Pacífico LNG export project in Mexico.

The Vista Pacífico LNG project is planned to be a mid-scale facility on Mexico’s West Coast with cargoes pointing at the high-demand markets such as Asia and South America.

California-based Sempra, the main owner and operator of the Cameron LNG plant in Louisiana, has already signed a non-binding agreement with Mexico’s state-owned utility company, the Comisión Federal de Electricidad, for the potential joint development of this project

Sempra said the accord signed with TotalEnergies was in the form of a memorandum of understanding (MoU) for the French oil and gas company to offtake one-third of future LNG production at Vista Pacífico LNG and to become a shareholder in the project with a minimum stake of 16.6 percent.

Sempra’s development of Vista Pacífico LNG is in addition to its Energía Costa Azul LNG export project, which is transforming an existing import terminal into an export plant.

TotalEnergies and Sempra are already partners in the Cameron LNG plant in Hackberry, Louisiana and in the Cosa Azul project.

Global player

TotalEnergies is already one of the world’s leading LNG export developers and traders with interests in liquefaction plants in Angola, Australia, Egypt, the United Arab Emirates, Nigeria, Norway, Oman, Russia and Qatar. It is also developing the Mozambique LNG project.

Mexico’s other LNG export plans also include the US Mexico-Pacific Ltd (MPL) LNG project.

The MPL company is based in Houston and has joined with LNG engineering firm Bechtel Inc. on developing a liquefaction and export facility on the Pacific Coast using US natural gas as the feed gas and processing technology from ConocoPhillips.

The MPL plant is proposed for near Puerto Libertad in the northwest state of Sonora and would have just over 14 million tonnes per annum of output.

Sempra’s LNG interests have been transferred into the Sempra Infrastructure entity under a corporate restructuring and one of its shareholders is the US investment fund Kohlberg Kravis Roberts, now known as just KKR.

A second MoU with Sempra and TotalEnergies provides for the co-development of several renewable energy projects in North America.

This could see Sempra’s acquisition of 30 percent of the TotalEnergies equity interest in a wind project off the coast of California that is preparing for an upcoming auction.

“We are pleased to further strengthen our partnership with Sempra in North America in LNG and to extend it to renewables,” said Patrick Pouyanné, Chairman and Chief Executive of TotalEnergie.

“Over the past years, TotalEnergies has become the leading exporter of US LNG and has built up a pipeline of 4 gigawatts of solar projects and 3 GW of offshore wind projects currently under development in the US,” added Pouyanné.

Japanese liquefied natural gas imports tumbled 15.8 percent last month and cargoes from Russia surpassed those from the Middle East while shipments from US export plants dropped.

Japanese LNG imports in January 2022 amounted to 6.78 million tonnes, just under 100 cargoes, compared with 8.06MT, or 118 shipments, in January 2021, according to the preliminary trade figures from Japan's Ministry of Finance.

Imports of LNG to Japan in December had declined by 9 percent to 7.03MT compared with 7.72MT in December 2020.

The cargoes received in January cost 556.63 billion yen ($4.81Bln), which was over 50 percent more than in January 2021 when the costs were 365.84Bln ($3.16Bln).

The restructuring of Japan’s LNG deliveries came after the nation formally ceded the No. 1 LNG import spot to China.

Shipments to Chinese terminals in 2021 had amounted to 78.93MT which was 18.3 percent more than in 2020.

Japan’s Finance Ministry confirmed annual cargo deliveries to Japan as 74.31MT, down 0.2 percent on 2020 and 4.62MT less that the Chinese total for 2021.

Shipments of LNG to Japan in January 2022 from Asian countries dropped by 6.9 percent year-on-year to 1.59MT.

Mideast supply down

Middle East cargo deliveries from nations like Qatar crashed by 55.6 percent versus January 2021 to 634,000 tonnes. That's as contracts ended or were re-arranged.

LNG imports from the US dropped by 31.7 percent in January to 651,000 tonnes while deliveries from Russia during the month climbed by over 41 percent to 780,000 tonnes.

The balance of imports in January 2022 came from Australia, African nations and the spot market.

That segment of the imports came mainly from Australia and amounted to 3.12MT, which was lower than the January 2021 total of 3.96MT.

The December data showed that the Japanese imports of thermal coal fell by less than LNG shipments.

Thermal coal imports in January dropped 1.3 percent year-on-year to 10.54 million tonnes.

The almost parity levels between thermal coal imports and LNG shipments disappeared in 2021 with thermal coal deliveries jumping to 112.92MT, an increase of 7.7 percent.

Nuclear power generation in Japan is still much reduced with only five plants with nine reactors from a total of 16 plants with 50-plus reactors having gained the agreement of local authorities to resume operations.

South Korea, the world’s third-largest liquefied natural gas importer, is still feeling the impact of increasing LNG prices and will continue a freeze on power prices into 2022.

Petronas, the Malaysian oil and gas company and leading floating LNG plant operator, has announced a 50th cargo lifting from the “PFLNG Satu” production hull, the first in the world to operate over a stranded gas field.

Global pricing agency Platts said the Japan-Korea Marker (JKM) price for liquefied natural gas assessed by the US firm rose to a record high of $20.705 per million British thermal units

Asian spot LNG prices are riding at six-year highs, as a cold spell in some countries in North Asia prompted record imports into the region.

While Platts reported the temporary record $20.705 trading level, though the February settled prices were still generally at around $15.550 per MMBtu.

The March price was at $9.550 per MMBtu and April was quoted at $6.500 per MMBtu.

Analysts said demand from Japan has pushed up North Asia spot cargo prices.

Jera Co. Inc., Japan’s biggest power generator and the world’s largest buyer of LNG, as well as other Japanese electricity and gas companies, are competing with LNG buyers in China and South Korea to secure supplies.

Platts said that the situation also meant that fewer cargoes were coming to Europe than is usual for this time of year.

The UK National Balancing Point benchmark gas price had been firm over the past week though has now fallen under $7.00 per MMBtu.

The NBP was last at $6.95 per million British thermal units while the continental European Dutch Title Transfer facility (TTF) price was lower at the equivalent of $6.35 per MMBtu.

“A major demand stimulus for the recent price increase was the cold snap across northeast Asia which has boosted gas consumption and accelerated drastic inventory draw-down in Japan, South Korea and China,” explained Platts.

“On the supply-side, production issues in countries such as Malaysia have depleted availability and led to delayed or deferred deliveries of LNG, as well as reduced volumes stipulated under long-term contracts,” it added.

US Gulf Coast LNG prices were lower. The February derivative contracts for FOB cargoes has declined to $5113 per MMBtu from
$6.400 per MMBtu.

The March price also fell back on the week to $4.883 per MMBtu from $5.929 per MMBtu. The April GCL price was from $4.532 per MMBtu.

Additionally, there have been shipping traffic constraints in the Panama Canal, meaning vessels carrying shipments from the US Gulf Coast have experienced longer shipping times into the Pacific region.

“This has meant more cargoes are expected in Asia in the later weeks of February or in March,” stated Platts.

Platts said it forecast a drop in Asia-Pacific demand through the first quarter. Even if some supply outages continue through March, prices were likely to decline.

Indonesia’s energy regulator has approved the development plan presented by Spanish energy company Repsol to develop one of the Asian nation’s largest onshore natural gas fields that would enable more LNG to be exported instead of being held back for domestic use.