Page 7 - EurOil Week 15 2021

EurOil COMMENTARY EurOil

Cheniere Energy’s
Corpus Christi LNG
plant in Texas.

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

Week 15 15•April•2021 www. NEWSBASE .com P7