LNG

Japanese liquefied natural gas imports dropped again last month as storage increased and North Asian prices declined with thermal coal deliveries also plunging while nuclear plant usage is increasing.

The International Energy Agency (IEA) said it carried out new analysis and identified a challenging 30 billion cubic metres supply-demand gap in the 2023 Northern Hemisphere summer season.

The Paris-based IEA said that the gap would occur at a key time for refilling European Union storage as Russian volumes remained cut off and Chinese LNG imports began to rebound for the 2022 drops.

The IEA repeated its support for governments taking measures to reduce natural gas consumption amid the global energy crisis.

The new report is called “Never Too Early to Prepare for Next Winter: Europe’s gas balance for 2023-2024”.

It states that gas storage sites in the EU are now 95 full and putting them 5 percent above the five-year average fill level.

However, the report cautions that the cushion provided by current storage levels, as well as recent lower gas prices and unusually mild temperatures, should not lead to overly optimistic conclusions about the future.

Filling

“The process of filling EU gas storage sites this year benefitted from key factors that may well not be repeated in 2023,” explained the IEA.

“These include Russian pipeline gas deliveries that, although they were cut sharply during 2022, were close to ‘normal’ levels for much of the first half of the year,” added the report.

“Total pipeline supply from Russia to the EU in 2022 is likely to amount to around 60 Bcm, but it is highly unlikely that Russia will deliver another 60 Bcm of pipeline gas in 2023 and Russian deliveries to Europe could halt completely,” stated the IEA.

The agency noted that China’s lower LNG imports in the first 10 months of this year have been a key enabler of higher LNG availability for Europe to compensate for the drop in gas deliveries from Russia.

“If China’s LNG imports recover next year to their 2021 levels, this would capture over 85 percent of the expected increase in global LNG supply,” noted the IEA.

“And global LNG supply is expected to increase by only 20 Bcm in 2023, with about one-third of the growth coming from the United States,” said the report.

“The expected rise in global LNG supply next year is about half the average increase during the 2016-2019 period and much less than the likely decline in Russian pipeline deliveries to the EU next year,” it declared.

The IEA Executive Director Fatih Birol commented that with the recent mild weather and lower gas prices, there is a danger of complacency on Europe’s gas supplies,.

“When we look at the latest trends and likely developments in global and European gas markets, we see that Europe is set to face an even sterner challenge next winter,” he stated.

North Asian spot liquefied natural gas cargo prices soared to over $20 per million British thermal units amid colder weather in China and Japan as 111 shipments were lifted this week from plants in the Pacific and Atlantic Basins as well as the Arab Gulf region and were pointing at Asia.

The US exported 14 liquefied natural gas shipments in the past week, four more than the previous week, as rising European and Asian LNG values and increasing Gulf Coast LNG futures prices were expected to give some momentum to the winter cargo market.

Sept 11 (LNGJ) - LNG cargoes were pointing at China and India with mid-September deliveries as the Japan-Korea Marker for spot cargoes was strengthening ahead of the winter season relative to values earlier in 2020. The JKM price for October deliveries was last at $4.310 per million British thermal units and November was at $4.475 per MMBtu, while December was quoted at $5.075 per MMBtu. Oil-linked long-term LNG prices are still at around the $7.000 per MMBtu mark with oil at $40 a barrel.

   The 160,000 cubic metres capacity “Asia Vision” was scheduled to deliver a cargo on September 14 to the Dapeng terminal on Guangdong province’s Pearl River Delta from the Woodside-operated Dampier terminal in Western Australia, according to shipping data. The 155,000 cubic metres capacity “GasLog Shanghai” was delivering a US cargo to the Dahej terminal in India in the coming week from the Corpus Christi plant in Texas. The 174,900 cubic metres capacity “LNG Abalambie” was scheduled to discharge a shipment on September 22 at the Chinese port of Tianjin from the Bonny Island plant in Nigeria.

Europe’s US LNG imports have slumped so far this year to less than 3% of total volume.

Jera Co. Inc., the Japanese liquefied natural gas procurement company set up by Tokyo Electric Power Co and Chubu Electric, has signed an agreement to cooperate on LNG with European company EDF Trading, a subsidiary of Electricite de France, and which may lead to a full LNG business merger.