Page 7 - AsiaElec Week 15 2021

AsiaElec COMMENTARY AsiaElec

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

Week 15 14•April•2021 www. NEWSBASE .com P7