LNG

The Saudi Arabian Oil Company, Saudi Aramco, posted third-quarter net income of $11.8 billion as it planned future LNG and natural gas as well as new energy projects and reported record one-day output at one of its gas fields and more gas discoveries.

Japan’s latest LNG market survey for the first half of 2020 noted a 5 percent growth rate year-on-year, while Japanese imports decreased at the same time as shipments to China and Europe increased significantly.

The analysis was written by Hiroshi Hashimoto, the Senior Analyst and Head of Gas Group Fossil Energies at the Japan Institute for Energy Economics in Japan (IEEJ).

After the first half of 2020, Hashimoto noted that according to China's preliminary trade statistics, the country imported 5.96 million tonnes of LNG in August 2020, slightly more than Japan's 5.84MT in the same month.

“It was the fourth time that China took the position of the largest LNG importing country on a monthly basis, following November 2019 and May and June 2020,” said the IEEJ report.

“During the first eight months of 2020, China imported 42.17MT, yet smaller than Japan's 48.28MT in the same period,” it added.

“However, Japan's LNG import so far in 2020 has been at the lowest levels during the last 10 years,” stated Hashimoto.

“Japan's average LNG import price in August was below $6 per million British thermal units for the first time since June 2016,” he also explained.

“Although volumes arrived at average prices of around $5 per MMBtu from Southeast Asia, the Middle East and Russia, the average price of LNG from the United States was in the USD9s,” his report stated.

The report said countries around the world imported more than 180MT in the first half.

“While Japan decreased its share in the global market to 20 percent, or 36.40MT, China and India increased LNG imports significantly,” it said.

While India increased LNG imports significantly in the first quarter, volumes decreased year-on-year in the second quarter.

On the other hand, China's growth of LNG imports slowed in the first quarter, followed by a rebound in the second quarter.

“European countries imported more than 51MT of LNG in the first half, an increase of over 15 percent from the same period of 2019, after importing more than 87MT in 2019,” said the report.

The increase in European imports in the first half of 2020 amounted to nearly 7MT out of the total global increase of more than 8MT.

That’s as natural gas consumption in Europe decreased by 7 percent year-on-year in the first half of 2020.

“As the gas production in the region decreased by 9 percent, the gap was filled with imports and withdrawals from storage,” said the Japanese report.

“As imports of LNG increased by 15 percent, imports of gas via pipeline from Russia decreased by about 20 percent in the same period,” it added.

Hashimoto noted that one of the factors that have enabled the increase of LNG imports in Europe in recent years, is the large underground storage capacity equivalent to 70MT of LNG.

“However, as the storage was more than 50 percent full as of the end of the winter withdrawal season at the end of the first quarter, 80 percent as of the end of the second quarter, and 94 percent full as of the middle of September, the region's gas and LNG infrastructure system has largely lost spare capacity and flexibility to accept further incremental LNG imports until the next withdrawal season from November,” explained the report.

The increase in LNG exports was concentrated in the US, increasing volumes by 9MT, or 58 percent, compared to an increase of 8MT tonnes in the world with some decreases in some exporting countries.

But the monthly exported volumes decreased month-on-month from April after peaking in January at 5.2MT. The monthly volumes were smaller year-on-year in June and July.

“However, due to recovery of international crude oil prices between June and August, LNG exports from the US are expected to regain competitiveness towards the fourth quarter, returning to the increasing trend,” the report concluded. 

A Japanese report has stated that liquefied natural gas and pipeline gas still account for a relatively small share in the energy mix in Asia and have plenty of room to be expanded to replace the current “massive coal consumption” by Asian nations. 

Japanese energy companies are now focusing on the total of 60 million tonnes of LNG volumes becoming available on the Gulf Coast and Atlantic Coast of the US from 2020, with many of the cargoes pointing at Japan.

Japan says the LNG market has not even begun to show signs of rebalancing in the midst of record oversupply and with more volumes to come on stream over the next three years in North America and the Asia-Pacific region.

International oil prices have been rising since early May, but the liquefied natural gas spot price for North East Asian countries such as Japan and South Korea, currently at an all-time low, is not encouraging a surge in demand.

Japan is preparing to enjoy the significant advantages of US shale-gas development and the expansion of the new liquefied natural gas export industry on the Gulf Coast, even if the prices of American cargoes are higher than those available in Asia right now.

March 17 (LNGJ) - Masakazu Toyoda, Chief Executive and Chairman of the Institute of Energy Economics in Japan, one of the leading compilers of reports on the LNG industry, has thanked IEEJ members for ranking first among all energy and resource policy think tanks in the world. “The Index from by the University of Pennsylvania is designed to identify and recognize centers of excellence in areas of public policy research,” Toyoda said. “The Institute celebrates its 50th anniversary in June this year, and this achievement reflects the outstanding contributions and efforts of all our staff,” the CEO added. “We will continue to conduct high-quality studies concerning energy and the environment for the benefit of Japan, Asia, and the whole world,” Toyoda added.