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 liquefied natural gas imports dropped for the sixth months out of the past seven as the nation received fewer shipments from the Middle East and Asia leading to a drop in its energy spending bill on fuels such as LNG and coal.

Shipments of LNG to Japan fell 13.1 percent in May to 5.56 million tonnes compared with 6.40MT in May 2018, according to preliminary figures from the Ministry of Finance.

Imports of the fuel had edged 0.3 percent higher in April to 5.62MT from 5.60Mt in April 2018 after dropping for the previous five straight months.

Imports of thermal coal, a competitor to LNG, also declined by 9.40 percent in May to 7.95MT.

Seven of Japan's nuclear power plants, which numbered 54 on line before the Fukushima disaster in 2011, were operating in May versus nine in the previous month.

The April 2019 rise in LNG deliveries to Japan had been 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 February 2019, imports dropped as the Japanese followed fuel-saving measures and the government encouraged a drop in costly LNG imports, with coal-fired power often filling the gap.

The cost of the May 2019 cargoes came to 302.17 billion yen ($2.79Bln), a decrease of 13.7 percent from the 350.33Bln yen ($3.23Bln) the cargoes cost in the same month a year ago.

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

The Ministry’s data for May showed a plunge in imports from the Middle East region for a second successive month to their lowest level since around 2005.

The May 2019 shipments from countries like Qatar, the United Arab Emirates and Oman totaled 793,000 tonnes, down 44.8 percent on May 2018 and less than the 945,000 tonnes received in April 2019.

Analysts said the fall suggests continued plant maintenance work in the region at a time when there was also an 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 also edged lower by 3.2 percent to 1.37MT from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei.

US volumes received also dropped to 130,000 tonnes versus 138,000 tonnes in April 2019, 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 534,000 tonnes, a rise of 12.2 percent versus the same month in 2018.

The balance of imports from Australia, African nations and the spot market amounted to 2.73MT, higher than the 2.66MT imported in April 2019.

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).

Singapore LNG cargo indices were at a high of $6.40 per million British thermal units for North Asia while May spot cargoes were quoted at around $6.00 per MMBtu as the oil price remained solid above $65 per barrel and underpinned hydrocarbon markets.

The Singapore average index for April was at US$5.983 per MMBtu, falling from last week’s average of US$6.136 per MMBtu.

Singapore’s latest LNG indices released on February 21 included a price of US$6.060 per MMBtu for the second half of March and was lower at US$5.985 per MMBtu for the first half of April.

Cargo prices for the second half of April were at US$5.980 and were slightly higher for the first half of May at US$6.059.

The Sling is an index series for LNG developed by the Singapore Exchange (SGX) and its subsidiary Energy Market Company (EMC).

It is a spot index for cargoes “on the waters in the vicinity of Singapore which could go into any port” and based on cargo sizes of 135,000 cubic metres capacity to 175,000 cubic metres capacity.

The North Asia price dropped to an April average of US$6.317 per MMBtu versus US$6.506 last week.

North Asia cargoes for the prompt second half of March were the highest available in the market at US$6.400 per MMBtu, before declining for the first half of April to US$6.325 per MMBtu, then down further to US$6.318 for the second half of April.

The first half of May quote for North Asia showed some recovery at US$6.350 per MMBtu.

The North Asia prices are for delivery ex-ship (DES) to all ports in Japan, Korea, Taiwan and China.

The Dubai-Kuwait-India Sling index is assessed in collaboration with London-based, inter-dealer global brokerage Tullett Prebon for regional cargoes shipped to India and the Middle East and averaged US$6.068 per MMBtu for April, down from last week’s US$6.205 per MMBtu.

The DKI index, based on a cargo of between 138,000 cubic metres capacity and 170,000 cubic metres, is seen at a high in the second half of March of US$6.130 per MMBtu before dropping to US$6.060 per MMBtu for the first half of April and edging higher to US$6.075 for the second half of April.

The first half of May quote for Dubai-Kuwait-India was at a steady US$6.113 per MMBtu.

The SGX LNG Index Group (Sling) is an initiative by SGX and EMC for spot LNG price discovery. It is a benchmark based on assessments of LNG cargo value by market participants.

They provide assessments based on the value of an LNG cargo at a specific location for delivery.

The Sling is based on participants submitting assessments to determine an index value.

“The participant pool consists of a broad group of market players to ensure that any Sling Assessment is as representative of actual market conditions as possible,” says the SGX, while pointing out that the participant is kept confidential at all times.

The SGX-EMC LNG prices include both lean and rich cargoes.

Singapore LNG cargo indices are staying above US$9.00 per million British thermal units for North Asian destinations in February with March cargo quotations now making an appearance and quoted below that level.

Japanese spot LNG delivered cargo prices surged to an average of $11.50 per million British thermal units in November, a rise of $4.40 per MMBtu compared with the price a year ago of $7.10 per MMBtu.