European and Asian LNG prices remain high amid weak Russian gas flows
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SINGAPORE (ICIS) – Spot LNG prices in Asia and gas prices in Europe remain high due to tight supply. The September 22 ICIS TTF contract price reached $61.02/MMBtu on August 2, the second highest on record after March 8.
Russia’s Gazprom said delivering a turbine engine that could help keep gas flowing to Europe was not possible. Russian gas flows to Germany via the Nord Stream gas pipeline remain low at 32 million m3/day. Norwegian gas flows are expected to increase by almost 10% to reach 31 Mcm/day.
The East Asia Index (EAX) was flat on Aug. 4 after rising for a week.
US Freeport estimated a restart in early October, as previously reported. U.S. Henry Hub futures were pushed higher on Freeport’s update.
Evolution of Asian demand
Northeast Asian demand came mainly from Japan and South Korea. Daigas Group, formerly Osaka Gas Group, and SK Prism were reportedly looking for October shipments.
High spot prices marginalized most end users in Asia. End users in Japan and South Korea are now turning to winter cargo.
LNG inventories at Japan’s major electric utilities rose 0.9% from the previous week to 2.28 million tonnes as of July 31, which is above the average LNG inventory on five years in July.
China remains balanced despite its many cargo resales in recent months, with weaker LNG demand and alternative fuel sources.
Chinese buyers are largely avoiding spot buying activities while NOCs have been heard performing time trading and other optimization activities.
New Tender Activity
India’s state-owned GAIL did not allocate any LNG shipments in its latest exchange tender, which closed on August 3. GAIL offered two FOB July 2023 cargoes in exchange for two DES September cargoes to Dahej.
India’s GSPC could have awarded limited volumes from its tender that closed last week.
Thailand’s PTT partially won its recent tender which closed on August 1 for five September shipments. BP and Trafigura were heard as winners. No less than three to five cargoes were purchased, with prices in the $45-47/MMBtu range.
Indonesian producer Pertamina offered FOB freight loading from Bontang LNG on August 17-18. The call for tenders closed on August 3.
Kuwaiti energy company KUFPEC could have sold an FOB shipment of Wheatstone LNG from September 18 to 23 for a mere $40/MMBtu to a portfolio player on July 28.
Australia supply shortage
Australia has extended the Australian Domestic Gas Security Mechanism (ADSGM) to 2030. The ADSGM allows the government to restrict exports to ensure there is enough gas for domestic use.
Australia’s east coast is expected to face a deficit in 2023, according to a report by the Australian Competition and Consumer Commission (ACCC).
TotalEnergies’ Cape Ann FSRU will be used at the French LNG terminal in Le Havre. The terminal is expected to start work this fall and be operational from September 2023.
The 173,000 m3 Bahrain Spirit FSU is heading to the German port of Wilhelmshaven on August 15, according to ICIS LNG Edge. It carries cargo from the US Sabine Pass. He could be preparing to take a stand in a project to import cargo into Germany to help replace declining Russian gas pipeline flows.
The French Engie has reserved the 1 billion m3/year of gas import capacity at the Dutch LNG import terminal in Eemshaven, with a capacity of 8 billion m3/year of gas imports by pipeline, which is expected to start operations in September.
The 6 mtpy Adriatic LNG terminal in Italy is closed for planned maintenance for most of the current August.