Page 4 - AsianOil Week 02 2021
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AsianOil                                      ASIA-PACIFIC                                           AsianOil




       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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