LEAD STORY
China’s early post-COVID demand recovery gives it headroom to absorb spot LNG cargoes on top of contractual supply from Australia and Qatar. With Asia spot LNG priced as low as $2.30 per MMBtu, US LNG deliveries are currently uncompetitive. But the arbitrage window between Henry Hub and the Japan-Korea Market (JKM) is about to reopen. “We expect higher Northeast Asian prices will end the recent practice of cancelling offtake cargoes from US projects from October loadings,” James Whistler, Global Head of Energy Derivatives at SSY told LNG Journal in an interview.
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Global LNG trade has been on a distinct declining trend since March, when public health measures at stalling the spread of COVID-19 began to take hold. Exports decreased by 2.16mmt (-7%) in April, followed by a 1.11mmt (-16%) reduction in May. In June, this trend saw its preliminary peak, whereby global conventional LNG trade saw a 2.83mmt reduction, decreasing to 26.30mmt (-9.7%) from the 29.13mmt seen in May. Trade performance in June 2020 also marks a decrease of 1.79mmt over 2019, equating to 6.4% of negative growth year-on-year.
LNG buying activity is gaining traction, spurred by rising demand from South Korean independents, second-tier Chinese importers and Indonesian utility buyers – all keen to strike mid-term deals at current low gas prices. In fact, deliveries of oil-indexed LNG cargoes have become competitive with thermal coal prices. Hence imported Australian coal increasingly gets displaced by LNG in markets like South Korea, Japan and Indonesia.
As a result of this divergence, specific sectors of the current fleet are ageing much faster than others as they are not replenished with newbuilds. Meanwhile, Chinese yards have helped to reign in newbuild prices since 2010. At the same time, we are seeing an emerging division between Chinese and South Korean yards based on technology. Finally, lower emissions policies have had a clear impact on engine and containment system choice.
Singling out the world’s emergence from the Covid-19 pandemic as “a pivotal moment” for global economies, BP chief executive Bernhard Looney sees signs of a rebounding global gas demand, driven a global shift to cleaner-burning fuels.
Argentina has both benefitted and suffered from a protracted low-price environment. The country’s macroeconomic performance is closely linked to its energy economy as seasonal demand spikes impact the national energy trade balance. As a result, successive Argentine governments have been keen to develop the country’s domestic hydrocarbon resources, chief among which is the Vaca Muerta shale oil and gas play. However, the development of the vast play is expensive and record low prices have eroded the commercial viability outlook for a large-scale liquefaction plant necessary to monetise the targeted shale gas surplus. Notably, Argentina’s gas production has once again embarked on a declining trajectory – albeit from elevated year-on-year levels – with domestic demand ramping up as the regional winter season takes hold. The country’s saving grace, however, is the same flush spot market and its prevailing low LNG prices that is plaguing its prospects as a growing LNG exporter.
WinGD claimed to be the only 2-stroke low speed engine designer to produce engines operating on diffusion (Diesel) and on pre-mixed (Otto) cycles in the maritime sector.
News that Air Liquide had commissioned a Turbo-Brayton cryogenic unit on an LNGC, prompted LNG Journal Technical Editor, Ian Cochran to speak with Yannick Dupont, Deputy Vice President Sales Turbo-Brayton and Cryogenic solutions.
The affordability and security of LNG as a fuel source for transport lend it strategic importance amidst the current Covid-19 pandemic, according to the Natural & Bio Gas Vehicle Association (NGVA Europe).
