Page 5 - AsianOil Week 15 2021

AsianOil ASIA-PACIFIC AsianOil

This comes despite extensive disruptions demand spikes seen during the winter are even
experienced by US LNG exporters over the prompting certain buyers to start preparing for
past year. In the summer of 2020, they bore the next winter already.
brunt of the drop in LNG demand caused by the Bloomberg reported this week that certain
pandemic, seeing numerous cargo cancellations North Asian buyers were making moves to stock
because the nature of US contracts typically up earlier than usual. China’s Sinopec was cited
makes shipments from the North American as having bought at least 35 cargoes for deliv-
country easier for buyers to cancel. Subsequently, ery between June and February, with the news
certain facilities on the US Gulf Coast were hit service reporting that other buyers in China,
by outages resulting from a particularly active Japan and South Korea were considering similar
hurricane season. Further unplanned outages moves, according to traders.
followed in February this year, when a winter It is unusual for buyers to be stocking up on
storm severely disrupted power generation and winter cargoes in April, and the move by Sinopec
gas operations, especially in Texas. Indeed, cer- suggests a desire to avoid the situation that was seen
tain LNG operators were asked at the time by last winter, when Asian spot prices shot to record
Texas Governor Greg Abbott to scale back pro- highs after languishing at low levels all year.
duction in order to relieve some of the pressure But Bloomberg also cited traders as saying
on gas-fired power generation. that low inventories in Europe could also con-
On April 8, Reuters cited analysts as saying tinue to pull cargoes away from Asia during the
feed gas flows to US LNG terminals would fall to course of 2021.
six-week lows of 9.1bn cubic feet (258mn cubic In a longer-term trend, the energy transi-
metres) per day owing to planned maintenance tion also continues to drive the boom in LNG
at Corpus Christi LNG. The analysts told the demand as more and more countries switch
news service that it was normal for maintenance from coal to gas for power generation, with
to take place in the spring, when demand is typ- long-term emissions reduction targets in mind.
ically lower. But Reuters also noted that so far in Among these is China, whose LNG imports rose
April, feed gas flows had averaged 11.1 bcf (314 more than 30% in March as the country’s new
mcm) per day, putting them above the monthly pipeline operator worked to open terminals to
record of 10.8 bcf (306 mcm) set in March. gas distributors.
Feed gas flows and exports of US LNG cannot But while US producers currently stand to
rise much further after planned maintenance is benefit from these various demand trends, there
concluded, though, as the US is now producing are also warnings that they will see rising levels
close to its full capacity, and more trains are not of competition in the coming years, especially as
due online until 2022, or possibly later this year. new liquefaction capacity comes online in Qatar.
“I think American projects are now going to
What next have to review their costs. The new projects will
Spot prices in both Asia and Europe remain not be able to compete with the Qataris,” the gas
strong enough for buyers to keep purchasing industry participant that spoke to Reuters was
record volumes of US gas. And the price and quoted as saying.™

Week 15 15•April•2021 www. NEWSBASE .com P5