LNG

Japanese liquefied natural gas imports edged higher, ending declines in the past seven months out of eight, as the nation again received fewer cargoes from the Middle East and shipment costs dropped as gas was substituted by more thermal coal imports.

Japanese spot liquefied natural gas cargoes contracted last month cost an average of $5.40 per million British thermal units, which was $2.80 per MMBtu less than in May 2018 amid a glut in supplies and lower seasonal demand.

Japanese liquefied natural gas imports edged higher by 0.3 percent in April after previously dropping for five straight months as LNG shipments from the Middle East plunged to a 14-year seasonal low and the nation’s energy demand slowed on the nuclear and thermal coal fronts.

Japan received 5.62 million tonnes of LNG in April compared with 5.60MT in the same month of 2018, according to preliminary figures from the Ministry of Finance.

Imports of thermal coal, a competitor to LNG, also declined by 2.5 percent to 8.5MT.

Nine of Japan's nuclear power plants, which numbered 54 on line before the Fukushima disaster in 2011, had re-started in April, though only seven are now operating.

LNG Cargoes delivered to Japan in March 2019 had amounted to 7.29MT compared with 7.93MT in March 2018, a fall of 8.1 percent.

The April 2019 rise in LNG deliveries to Japan was the first since October 2018 when 6.53MT was received, a 6.5 rise on the previous October.

Even during the peak winter months from November 2018 through January 2019, imports dropped as the Japanese followed fuel-saving measures and the government encouraged a drop in costly LNG imports.

The cost of the April 2019 cargoes came to 313.5 billion yen ($2.83Bln), a rise of 5.8 percent from the 296.2Bln yen ($2.68Bln) the cargoes cost in the same month a year ago.

For balance of payments purposes, Japan has been trying for a number of years to bring LNG import costs under control.

The Ministry’s data for April showed a plunge in imports from the Middle East region, to their lowest level since April 2005.

The April 2019 shipments from countries like Qatar, the United Arab Emirates and Oman totaled 945,000 tonnes versus 1.23MT in April 2018, a drop of 23.5 percent, suggesting plant maintenance work in the region at a time when there was also a reported outage of the Qatar-UAE Dolphin Energy natural gas pipeline.

The last time monthly shipments from the Middle East dropped under the 1MT level was in 2005 when they regularly totaled between 950,000 to 970,000 tonnes in the second quarter of the year.

Asian LNG shipments cargo deliveries increased by 12.4 percent to 1.47MT from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei.

US deliveries amounted to 138,000 tonnes, the equivalent of two large cargoes while one delivery was received in the same month a year ago.

Monthly Russian shipments from the Sakhalin Island plant in the Far East amounted to 404,000 tonnes, a fall of 13.9 percent versus 2018.

The balance of imports from Australia, African nations and the spot market amounted to 2.66MT, a 32 percent rise compared with the 2.02MT received in April 2018.

Japanese LNG imports had declined by 0.9 percent in 2018. The 2018 imports amounted to 82.85MT versus 83.63MT received in 2017.

Japan’s 2018 import bill was 20.8 percent higher than in 2017 at 4,730Bln yen ($43.14Bln). The Japanese had paid 19.3 percent more in 2017 compared with the previous year with an LNG bill of 3,915Bln yen ($35.58Bln).

Japanese spot liquefied natural gas cargoes arrived in Japan last month at a cost of $1.70 per million British thermal units less than the previous month and down $3.10 per MMBtu versus March 2018.

The delivered cargoes in March 2019 had cost an average of $7.10 per MMBtu versus $8.30 per MMBtu in February 2019 and $10.20 per MMBtu in March 2018.

Shipments contracted in March 2019 had an average price of $6.40 per MMBtu compared with $7.50 per MMBtu in February 2019 and $8.80 per MMBtu in March 2018, a year-on-year drop of $2.40 per MMBtu.

The North Sea Brent crude oil price that influences Japanese long-term contract prices also impacts spot LNG and other energy markets and the price was at around $65 per barrel or more in the first quarter of 2019.

The spot cargo numbers come from the commerce division of the Japanese Ministry of Economy, Trade and Industry and are only issued if a minimum number of two trades are recorded.

The Ministry emphasizes that “spot LNG” refers to fuel traded on a cargo-to-cargo basis and does not mean shipments under contracts on a short-term, medium-term or long-term basis.

The statistical accounting of the spot prices started in March 2014.

Overall Japanese LNG imports dropped 11.4 percent in February 2019 with only Middle East volumes holding up as more coal-fired power use and nuclear generation offset the need for gas-fired power as the cost of LNG shipments also increased.

Cargoes delivered to Japan in February 2019 amounted to 7.35 million tonnes compared with 8.29MT in February 2018.

The cost of the February 2019 cargoes came to 465.54 billion yen ($4.18Bln), a rise of 8.6 percent from the 428.72Bln yen ($3.85Bln) the cargoes cost in the same month a year ago.

Japanese liquefied natural gas imports plunged 11.4 percent with only Middle East volumes holding up as more coal-fired power use and nuclear generation offset the need for gas-fired power as the cost of LNG shipments also increased.

Spot liquefied natural gas cargoes arrived in Japan last month costing an average of $8.30 per million British thermal units, a drop of $2.20 per MMBtu compared with the previous month.

Japanese liquefied natural gas imports dropped by 8.7 percent in January as more coal and nuclear power generation offset the need for LNG cargoes, though the cost of the LNG rose by more than 15 percent compared with a year ago.

Shipments to Japan in January amounted to 7.54 million tonnes compared with 8.26MT in January 2018.

The December 2018 imports had amounted to 7.25MT compared with 7.95MT in December 2017.

Nine of Japan's nuclear power plants, which numbered 54 on line before the Fukushima disaster in 2011, have re-started to reduce LNG needs.

A rise in January thermal coal imports also helped offset the drop in LNG cargoes. Coal shipments rose 7 percent in January compared with the year-ago period to 10.67MT.

The cost of the January 2019 cargoes came in at 479.22 billion yen ($4.32Bln), a rise of 15.3 percent from the 416.29Bln yen ($3.75Bln) the cargoes cost in the same month a year ago.

The Ministry of Finance data for January showed that Asian LNG shipments from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei dropped 25.8 percent to 1.91MT.

Imports from the Middle East region fell 23.7 percent year-on-year, with shipments from countries like Qatar, the United Arab Emirates and Oman totalling 1.48MT in January 2019.

US shipments of LNG amounted to 267,000 tonnes, a rise of 36 percent on the same month last year.

Japan imported 2.49MT of US cargoes in 2018 and that figure will rise in 2019 as the nation will be importing more cargoes.

These will come from the Cheniere Energy-owned Sabine Pass plant in Louisiana and the Cove Point plant in Maryland operated by Dominion Energy, as well as the newest Cameron LNG plant in Louisiana set to start operations under Sempra Energy and with Japanese shareholders.

Monthly Russian shipments from the Sakhalin Island plant in the Far East declined 7.6 percent in January to 617,000 tonnes.

The balance of imports from other countries amounted to 3.26MT, with most volumes coming from Australia, backed by shipments from African nations and the spot market.

Japanese LNG imports had declined by 0.9 percent in 2018. The 2018 imports amounted to 82.85MT versus 83.63MT received in 2017.

Japan’s 2018 import bill was 20.8 percent higher than in 2017 at 4,730Bln yen ($43.14Bln), according to the Finance Ministry. Japan had paid 19.3 percent more in 2017 with an LNG bill of 3,915Bln yen ($35.58Bln).

Japanese spot LNG cargo prices were at an average of $8.30 per million British thermal units in January 2019 on a contracted basis, $0.90 per MMBtu lower than the previous month, though $2.70 per MMBtu down on January 2018 when the trading level was $11.00 per MMBtu.

Japanese liquefied natural gas imports declined by 0.9 percent in 2018 as coal and nuclear provided more competition for power generation, though the costs of the LNG shipments soared by more than 20 percent and a fall in Asian shipments was partially offset by a rise in Middle East cargoes.

Japanese spot LNG delivered cargo prices were at an average of $10.60 per million British thermal units in December, a rise of $2.50 per MMBtu compared with the price the previous year of $8.10 per MMBtu, though lower than the November 2018 price.