Japanese importers seek prompt LNG - Rystad Energy’s Gas and LNG Market Update

Asian spot liquefied natural gas (LNG) financial derivatives for November traded at $13.6 per million British thermal units (MMBtu) on 9 September, down 3.5% week-on-week, on limited demand for November delivery, while some Japanese importers were seeking prompt spot LNG cargoes for September delivery.

Asia

The Queensland Curtis LNG Train 1 export terminal in Australia resumed operation on 6 September, four days after it went offline.

Meanwhile, supply from Australia’s Ichthys LNG, North West Shelf LNG, and Malaysia’s MLNG facilities remain reduced.

Forecasts continuously point to above-average temperatures until early October for Japan and South Korea.

Day-ahead power prices in Japan’s electricity market is even higher as of 10 September compared to September 2023, a year in which many Japanese power utilities were facing unexpectedly high temperatures in September.

Japan’s Jera and Kansai Electric are seeking additional LNG in the spot market for September delivery, which is relatively prompt and is likely to command a slight premium to the market level due to limited prompt supply.

Spot LNG delivery for September had already settled at $12.78 per MMBtu on 15 August 2024.

In the downstream market, Jera’s gas-fired Joetsu plant unit 2-2 (595 megawatts [MW]) went offline on 9 September due to electric equipment issues.

Jera’s Shin-Nagoya’s gas-fired plant unit 7-5 (243 MW) remains offline but plans to restart on 23 September.

Jera’s coal-fired plant Yokosuka unit 2 (650 MW) is offline since 4 September due to equipment failure and has no planned restart date as of 10 September.

In China, Chaozhuo LNG import terminal, co-operated by Sinopec and Huaying Group, began operation on 9 September.

Europe
LNG for October delivery to Northwest Europe traded at $11.8 per MMBtu on September, 3.8% lower than a week earlier, on high storage and healthy supply from the US.

Europe’s Title Transfer Facility (TTF) traded 3.2% lower at around $12 per MMBtu on 9 September.

Portfolio players and traders with US-origin LNG have the incentive to send their cargoes to Europe as the arbitrage for US LNG is closed for Asia.

Underground storage facilities were 93% full at around 107 billion cubic meters as of 8 September, similar to the level seen in 2023.

Total gas pipeline flows from Norway into Europe remained low, at 184.6 million cubic meters per day (MMcmd) as of 9 September, 2.3% lower week-on-week, but higher than the 130.1 MMcmd in 2023.

This is due to unexpected outage at Davlin and planned annual maintenance at Asgard, Kaarsto, Kollsnes, Kristin, Heidrun, Johan Sverdrup, Njord, Skarv, Sleipner and Troll.

Meanwhile, gas pipeline flows from Russia to Europe were down 4.8% week-on-week at 91.1 MMcmd as of 7 September, and lower than the 96.8 MMcmd recorded a year ago.

US
The front-month Henry Hub gas prices was 1.4 % lower week-on-week to $2.17 per MMBtu on 9 September, with feedgas levels to LNG export projects at a high level, averaging at 13.4 billion cubic feet per day (Bcfd) for 2 to 9 September, compared to 12.98 Bcfd for the same period in 2023.