LNG

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Among a select few greenfield LNG projects remaining, Golden Pass LNG seems on track for first LNG exports some time in 2024. The Qatar Petroleum- and ExxonMobil-backed project is already pushing for expansion to 18mtpa as other North American projects are being delayed. Notably, the planned Golden Pass startup broadly coincides with Ras Laffan expansion plans.

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Pressured by both higher LNG prices and waning available supply, Turkey’s LNG imports have declined sharply year-on-year during 1H 2021. 

Cumulative imports in June this year trailed their 2020 equivalents by almost 3.0mmt. Prices have briefly peaked at around $21/mmBtu in the Far East, echoing the region’s steep demand growth. Consequently, Turkey’s LNG buying scope has been squeezed by both higher prices and available cargoes as exporters seek to capture Far Eastern market share.

Turkey’s LNG imports plummeted in 1H 2021 as LNG prices surged in the Pacific Basin, drawing away volumes from Europe. During 1H 2021, the country’s LNG imports dropped by 41 pct year-on-year to 4.32mmt, according to our data. This corresponds to the equivalent 6bcm of imports reported by Turkey’s Energy Market Regulatory Authority (EMRA).

EMRA stated that Turkish LNG imports accounted for only about 20 pct of the country’s total natural gas imports of 30.30bcm.

In contrast, pipeline gas supply had surged by 35 pct year-on-year in 1H 2021, according to EMRA. Over the same period last year, LNG imports amounted to 7.30mmt, our data show, or 10.30bcm (46pct) out of a total of 22.5bcm of all Turkish gas purchased during the period, according to EMRA.

High prices

Speaking to state-run news agency Anadolu Agency (AA), Ali Arif Aktürk, a board member of Izmir Gaz, highlighted that natural gas and LNG prices on international markets were lower last year, in part held back by cheaper oil prices. Brent-linked price curves are still a common method to determine LNG prices. 

In 1H 2020, LNG prices hovered around $5/mmBtu, compared to between $17-19/mmBtu this year, led by the Far East.

For example, Chinese customs data shows landed LNG prices to have briefly peaked at around $21/mmBtu in mid-August. Aktürk also pointed to high oil prices as a factor. Brent climbed to as high as $75/bbl after multi-year low levels.

Fast growth elsewhere

Apart from less purchasing power due to higher prices, much of available LNG supplies was hoovered up by the Far East.

Our data point to robust demand growth in the Far East, where LNG offtakes in 1H 2021 grew by 13.31mmt year-on-year. This represents year-on-year demand growth of 13.5pct in 1H 2021 compared to comparatively modest growth of 2.2pct in 1H 2020.

Turkish LNG imports have historically stemmed from both long-term contracts and spot cargoes.

During the first half of this year, 2.22mmt of Turkey’s LNG offtakes were supplied through long-term contracts with Algeria, making up 51pct of LNG imports during the period.

Although this represented robust year-on-year growth for Turkish LNG imports from Algeria, offtake from the United States fell by 0.41mmt (-23pct) to 1.38mmt in 1H 2021 from 1.79mmt in 1H 2020. Nigeria supplied the remaining 0.72mmt, representing a more modest year-on-year decrease of 0.04mmt (-6pct).

Notably, Qatar, historically among Turkey’s most prominent LNG suppliers, did not export LNG to Turkey during the first half of the year.

Instead, its exports to the Far East surged by 3.27mmt (21pct) year-on-year during 1H 2021.

Declining imports

Aktürk explained that Turkey's Petroleum Pipeline Company (BOTAŞ) imported a significant amount of LNG last year — our data show Turkish imports at 10.51mmt — to take advantage of low prices.

The sum of LNG imports in 2020 was 19pct higher compared to its full-year equivalent of 8.80mmt. This kind of growth was not repeated this year.

Qatar is determined to re-ascend as the world’s foremost LNG producer by capacity before 2030. The country has its sights fixed on market share expansion in the Far East. However, the market is shifting and Qatar may have to adapt. Markets Editor Alexander Wilk investigates. 

Imminent start-up of Nord Stream 2 is bound to lower the EU’s gas price level as Russian gas costs nearly half of what buyers have to pay for LNG. Fears about possible delays of the second Baltic Sea interconnector, however, made prices at the Dutch TTF gas trading hub break through the €40/MWh mark as both Europe and Asia turn to LNG to replenish gas storage prior to next winter.  Markets editor Anja Karl has more. 

The tenure of long-term LNG Sales and Purchase Agreements (SPAs) has decreased materially in recent years, down from around 20 years to currently 10 years or less. International law firm White & Case’s Asia-based lawyers Tim Fourteau, Alex Woody and Yun Yong say one reason behind this trend is the growing role of traders and aggregators, who closed around half of the 10-year SAPs in 2021.