Page 4 - AsiaElec Week 02 2021

AsiaElec COMMENTARY AsiaElec

Power to benefit from positive

start to 2021 for LNG

After a tough 2020, this year has started relatively positively for the LNG industry

ASIA THE LNG industry took a battering in 2020, This has been attributed to a number of fac-
but ended the year and started 2021 on a rela- tors, including strong consumer demand, colder
WHAT: tively positive note. This is in large part owing than expected winter weather and a shortage of
The LNG industry has to higher LNG prices, with demand enjoying its prompt LNG supplies and spot tankers. Recent
seen a relatively positive seasonal winter boost thanks to cold weather. outages at various liquefaction plants around the
start to 2021. And despite new lockdowns related to the coro- world are also thought to have played a part.
navirus (COVID-19) pandemic in various parts This combination of factors is reported to
WHY: of the world, there are hopes that the virus could have sent buyers of LNG scrambling to secure
Higher prices for the fuel soon be contained as several new vaccines are supplies, which is helping to maintain upward
have helped improve the rolled out. pressure on prices. Indeed, Reuters reported
outlook for the industry These factors are all feeding into short-term this week that Japan’s JERA – the world’s largest
bullishness, but there are also indications of buyer of LNG – was having to operate some of
WHAT NEXT: longer-term confidence, at least among some its gas-fired power plants at lower rates owing to
Certain developers are developers. And this cautious optimism could lower stockpiles of LNG.
demonstrating more ultimately lead to more final investment deci- “We are trying our best to secure LNG supply
bullishness on long-term sions (FIDs) being taken in 2021, even though through our long-term contracts and the spot
investments further volatility cannot be ruled out. market which trades supply to be delivered in
about 1.5-2 months,” a JERA spokesman told
On the up the news service. He added that his company
Just nine months ago, in late April, north-east was also seeking cargoes for quicker delivery and
Asian spot prices fell to record lows of around running its coal plants at full capacity.
$1.675 per million British thermal units ($46.33 JERA is not the only Japanese company faced
per 1,000 cubic metres). However, the Argus with this situation, with Reuters also citing a
Northeast Asia (ANEA) front half-month price Kansai Electric Power spokesman as saying his
rose to $21.785 per mmBtu ($602.57 per 1,000 company was seeing declining LNG inventories,
cubic metres) for the first-half February on Jan- forcing lower run rates at some of its gas-fired
uary 6, surpassing a previous record set in 2014. power plants.

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