Page 4 - AsianOil Week 02 2021

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A positive start

to 2021 for LNG

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

COMMENTARY THE LNG industry took a battering in 2020, prompt LNG supplies and spot tankers. Recent
but ended the year and started 2021 on a rela- outages at various liquefaction plants around the
tively positive note. This is in large part owing world are also thought to have played a part.
WHAT: to higher LNG prices, with demand enjoying its This combination of factors is reported to
The LNG industry has seasonal winter boost thanks to cold weather. have sent buyers of LNG scrambling to secure
seen a relatively positive And despite new lockdowns related to the coro- supplies, which is helping to maintain upward
start to 2021. navirus (COVID-19) pandemic in various parts pressure on prices. Indeed, Reuters reported
of the world, there are hopes that the virus could this week that Japan’s JERA – the world’s largest
WHY: soon be contained as several new vaccines are buyer of LNG – was having to operate some of
Higher prices for the fuel rolled out. its gas-fired power plants at lower rates owing to
have helped improve the These factors are all feeding into short-term lower stockpiles of LNG.
outlook for the industry. bullishness, but there are also indications of “We are trying our best to secure LNG supply
longer-term confidence, at least among some through our long-term contracts and the spot
WHAT NEXT: developers. And this cautious optimism could market which trades supply to be delivered in
Certain developers are ultimately lead to more final investment deci- about 1.5-2 months,” a JERA spokesman told
demonstrating more sions (FIDs) being taken in 2021, even though the news service. He added that his company
bullishness on long-term further volatility cannot be ruled out. was also seeking cargoes for quicker delivery and
investments. running its coal plants at full capacity.
On the up JERA is not the only Japanese company faced
Just nine months ago, in late April, north-east with this situation, with Reuters also citing a
Asian spot prices fell to record lows of around Kansai Electric Power spokesman as saying his
$1.675 per million British thermal units ($46.33 company was seeing declining LNG inventories,
per 1,000 cubic metres). However, the Argus forcing lower run rates at some of its gas-fired
Northeast Asia (ANEA) front half-month price power plants.
rose to $21.785 per mmBtu ($602.57 per 1,000 Demand for LNG from China and South
cubic metres) for the first-half February on Jan- Korea in particular is also reported to be rising.
uary 6, surpassing a previous record set in 2014. Indeed, Reuters reported separately last week
This has been attributed to a number of fac- that China’s monthly imports of LNG had hit a
tors, including strong consumer demand, colder record high of over 9mn tonnes in December,
than expected winter weather and a shortage of according to shiptracking data from Refinitiv

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