European LNG prices drop again on milder weather and gas storage levels grow on much lower demand
European Union liquefied natural gas prices dropped again as EU storage builds hit their highest level of the season so far as milder weather swept across the continent and gas demand declined along with pipeline gas flows from Norway, while LNG cargo deliveries toNorth Asia were steady.
Russian LNG production rises while natural gas output drops because of ending of pipeline sales to EU
Russian liquefied natural gas production has risen in 2022 while overall natural gas production by Gazprom and other companies has dropped because of Russian gas cut-offs in retaliation for US and European Union-led sanctions imposed for the invasion of Ukraine.
Japan’s key minister Nishimura approves plan for government agency to finance LNG cargoes in emergency
The Japanese Government’s key Minister of the Economy, Trade and Industry (METI), Yasutoshi Nishimura, said he had approved a proposal to help improve the nation’s emergency access to liquefied natural gas for power generation.
Minister Nishimura said in a statement that he would allow the government agency, the Japan Oil, Gas and Metals National Corporation (JOGMEC), to fund the purchase of spot LNG if required.
“Japan also plans to revise another law to allow the government to order large users to limit use of city gas in case of an emergency,” added the Nishimura statement.
Japanese LNG buyers who are the biggest utilities have been mindful of avoiding high-cost LNG purchases, though during August 2022 monthly LNG costs rose to over the US$6 billion ( 874.47 billion yen) level for the first time.
Rising energy costs are affecting the balance of payments of countries worldwide, though Japan is particuarly affected as it has no sizeable reserves of domestic energy resources and must buy in most of its oil, gas and coal.
However, the move on LNG supplies signals that there are limits to cutting off energy shipments as the Northern Hemisphere winter approaches.
Deliveries of LNG to Japan’s network of 37 terminals have amounted over the past few months to around 6.25 million tonnes, or amount 93 cargoes, according to trade figures from the Japanese Ministry of Finance.
Cargo competition
Even in the past week deliveries of LNG will slip as it lags North Asian LNG users China and South Korea in cargo numbers.
Shipping data shows that Chinese terminals are set to receive about 23 shipments in the week through October 16 compared with 18 bound for delivery to Korea and 14 shipments going to Japan.
Among JOGMEC’s traditional role is to help Japanese companies make equity investment in overseas energy projects as part of Japan’s focus on securing long-term oil and gas and other fuels and to make investments itself in important projects.
JOGMEC has also revised its statutes to investment in new and cleaner fuel ventures rather than just hydrocarbons and to raise its profile in sectors such as carbon-capture and storage.
Just last week, on October 8, JOGMEC agreed to collaborate with the Saudi Arabian Oil Company on upstream fuel ventures.
Hosono Tetsuhiro, Chairman and Chief Executive of JOGMEC, and Mohammed Al-Qahtani, Senior Vice President of Downstream at Saudi Aramco, signed the accord.
“JOGMEC intends to proactively support the implementation and/or provision of risk money, equity capital and liability guarantees, for a specific project in the Kingdom of Saudi Arabia related to the production and/or storage of hydrogen and ammonia, which are our new support areas under the revised JOGMEC law promulgated on May 20,” the agency explained.
LNG prices increase as demand rises with North Asia spot cargo values at over $13.00 per MMBtu
The prices of liquefied natural gas on global markets increased to their highest in 2021 in Europe while the spot LNG cargo price for North Asia rose over the $13.00 per million British thermal units level amid oil market concern about US supplies as the differential between North Sea Brent crude and US oil narrowed to well under a dollar.
Woodside reports 40 percent drop in sales revenue and looks to rising LNG prices in final quarter
Woodside Petroleum, the company with stakes in three Western Australian liquefied natural gas plants, reported a more than 40 percent plunge in sales revenues to US$738 million from US$1.24 billion in the year-ago quarter as the average realized LNG price dropped.
Singapore LNG spot cargo prices hit three-year lows as glut affects China and Japan values
Singapore LNG spot cargo prices dropped to around three-year lows because of high volumes and plunging seasonal demand as cargoes for North Asia destinations such as China and Japan lost US$0.66 per MMBtu in a week from already depressed levels.
