LNG

Beijing Gas Blue Sky Holdings, a Chinese natural gas provider and operator focusing on the midstream and downstream, has presented an overview of the current LNG market and prices in China and the effects of Russia’s Ukraine invasion and that of the Covid-19 pandemic, which affected the Chinese for longer.

North Asian LNG prices declined for a fourth week as cargoes were on the water through to the end of November and European LNG cargo values dropped while UK gas prices were just $7.70 per million British thermal units higher than a year ago.

Chinese liquefied natural gas imports rose year-on-year by 4.2 percent last month and over 18 percent in the year-to-date period, keeping the nation on track to be the world’s No. 1 LNG importer for 2021.

The Intercontinental Exchange has released its latest statistics showing a 46 percent year-on-year surge in the average daily volumes of trading in the Japan-Korea Marker (JKM) spot LNG price for North Asia, while the main European LNG product, the Dutch Title Transfer Facility (TTF), showed a 24 percent jump in daily volumes.

Australian LNG shipments to North Asia from the world's largest exporter hit record levels for some nations in March and revenues increased from the previous month, led by Chinese demand for cargoes.

ENN Group, the leading non-state energy company in China with LNG and city-gas assets, reported an increase in annual revenues and profits as its reach extended to 18 more large towns and cities in 2020.

Demand for liquefied natural gas shipments from liquefaction plants in the Atlantic and Pacific Basins remained at reasonable levels as cargo liftings edged higher and North Asia spot prices increased again along with European gas values.

China’s combined natural gas imports for January and February 2021 rose 17.5 percent to 20.80 million tonnes compared with the previous year as colder weather increased demand for winter heating and industrial activity was higher than last year when Covid-19 was spreading.

Natural gas imports over the January-February period in 2019 had amounted to 17.36MT for LNG and pipelines, according to China's General Administration of Customs.

China’s main LNG suppliers are Australia, Qatar, Malaysia, Indonesia, Russia and the US.

The Chinese also receive pipeline gas from southeast Asian nation Myanmar and from the Central Asian republics of Turkmenistan, Kazakhstan and Uzbekistan, as well as from Russia since December 2019 as part of Russian company Gazprom's Power of Siberia project.

The separate data for LNG is expected to be released soon in the belated statistical gathering process caused by the Chinese Lunar New Year holidays in February 2021.

Chinese industrial activity usually slows during the New Year break, which fell in the middle of February this year.

The January-February period of 2020 was when Covid-19 was spreading in China.

The Chinese data showed that in January-February 2021, overall imports of all products increased 22.2 percent from a year earlier.

China also posted a trade surplus of $103.25 billion for the first two months of 2021.

Analysts had expected the trade surplus to narrow to $60.15Bln from $78.17Bln in December.

China had confirmed in January 2021 that 2020 LNG imports hit an annual record.

Chinese imports totalled 67.13MT of LNG in 2020, an increase of 11.5 percent.

Shipments during December to China’s network of 22 LNG terminals also hit a record monthly high of 7.59MT, up 18.2 percent from the December 2019.

Imports by China have been increasing even at higher North Asia spot LNG cargo prices.

The Japan-Korea Marker price for North Asia had fallen to its lowest ever of $1.83 per million British thermal units on the 29th of April 2020 before jumping more than eight-fold in the closing stages of December to a more than six-year high of $15.10 per MMBtu.

The JKM prices then rose substantially in January and February 2021 to reach a reported high of up to $38.00 per MMBtu.

Chinese imports had grown at a fast pace to 61.68MT in 2019, a 13.5 percent increase on 2018 when 53.81MT was received and from 2017 when 39MT was imported.

Worldwide liquefied natural gas export plants increased their overall liftings, apart from in the US where the markets were affected locally for natural gas and globally for oil by freezing weather causing power outages that hit US output, while North Asia spot LNG prices rose on firm demand.

China may be trailing Japan in LNG imports but it remained the world’s largest natural gas importer by far when pipeline volumes are counted, well ahead of the world No. 2 gas importer Germany and No. 3 Japan as LNG suppliers also intensified their battle for Chinese LNG market share.