LNG market in Asia: Record activity in July 2024

In July, the Asian liquefied natural gas (LNG) market recorded record activity, marked by increased transaction dynamics and price fluctuations.

Partagez:

July saw a significant increase in activity on the physical liquefied natural gas (LNG) market in Asia.
Data from S&P Global Commodity Insights reveals that the total number of offers, requests and transactions reached an annual high, with 282 transactions recorded.
Eight major players, including ADNOC Trading, BP, EnBW, ENN, PetroChina, Glencore, Shell and Vitol, completed twelve transactions representing around 780,000 metric tons of physical LNG cargoes, scheduled for delivery in August, September and October in the Japan-Korea-Taiwan-China region.

Price Fluctuations and Demand Dynamics

Spot LNG prices in Asia fell slightly in July, averaging $12.158/MMBtu versus $12.578/MMBtu in June.
This was due to moderate demand and an abundance of cargoes available on the spot market.
Japan saw a temporary increase in LNG purchases due to high electricity demand caused by a heat wave, but purchases remained limited as utilities had anticipated this situation and prepared their inventories in advance.

Impact of Climate and Geopolitical Conditions

The southern and south-eastern regions of Asia experienced reduced buying interest due to the effects of the monsoon and discouraging price levels for Chinese importers. The shutdown of the Freeport LNG facility on July 7, ahead of Hurricane Beryl, raised concerns.
Damage to the air coolers and the power outage kept feed gas deliveries close to zero for over a week, before repairs were completed in mid-July.

East-West Arbitrage and Derivatives Market Activity

In July, arbitrage opportunities were limited due to narrow spreads between spot LNG prices in Europe and Asia.
Platts valued East-West arbitrage at minus 19.7 cents/MMBtu on August 1.
This reduction is also illustrated by a decrease in the number of bids nominating US base ports in the physical MOC process, from 51.1% in June to 29.7% in July.
The derivatives market also recorded record activity in July, with 1,704 offers, requests and transactions reported, marking an increase of 5.97% on the previous month and more than tripling year-on-year.
A total of 150 transactions for monthly and month-end JKM derivatives were reported by 19 entities, including ADNOC Trading, BP, Dare, DGI, Engie, Glencore, Gunvor, Jera GM, Marubeni, Macquarie, Mercuria, PetroChina, RWE, Shell, Six One Commodities, Total Energies, Trafigura, Unipec and Vitol.
In summary, July 2024 proved to be a key month for the Asian LNG market, characterized by record activity and notable fluctuations in price and demand.
Climatic and geopolitical conditions also had a significant impact, influencing both supply and demand.
This dynamic underlines the growing importance of LNG in the Asian and global energy landscape.

In response to rising summer electricity consumption, Egypt signs import agreements covering 290 shipments of liquefied natural gas, involving major international firms, with financial terms adjusted to the country’s economic constraints.
Egyptian fertilizer producers suspended their activities due to reduced imports of Israeli gas, following recent production halts at Israel's Leviathan and Karish gas fields after Israeli strikes in Iran.
A report identifies 130 gas power plant projects in Texas that could raise emissions to 115 million tonnes per year, despite analysts forecasting limited short-term realisation.
Japanese giant JERA will significantly increase its reliance on US liquefied natural gas through major new contracts, reaching 30% of its supplies within roughly ten years.
Sustained growth in U.S. liquefied natural gas exports is leading to significant price increases projected for 2025 and 2026, as supply struggles to keep pace with steadily rising demand, according to recent forecasts.
Shell is expanding its global Liquefied Natural Gas (LNG) capacities, primarily targeting markets in Asia and North America, to meet rising demand anticipated by the end of the decade.
Above-average summer temperatures in Asia are significantly boosting demand for American liquefied natural gas, offsetting a potential slowdown in Europe and opening new commercial opportunities for U.S. exporters.
Duke Energy plans a strategic investment in a natural gas power plant in Anderson, marking its first request for new electricity generation in South Carolina in over ten years.
Adnoc Gas commits $5bn to the first phase of its Rich Gas Development project to boost profitability and processing capacity at four strategic sites in the United Arab Emirates.
The European Commission aims to prevent any return of Russian gas via Nord Stream and Nord Stream 2 with a total transaction ban, part of its 18th sanctions package against Moscow.
Argentina expands its capacity around Vaca Muerta as Mexico explores the prospects of exploiting unconventional resources to meet its 2030 energy targets.
Petredec Group begins construction of a gas terminal in Chongoleani, Tanzania, scheduled for commissioning by 2027, to strengthen LPG import and logistics across East Africa.
The liquefied natural gas (LNG) terminals market is projected to grow 67% by 2030, driven by global energy demand, liquefaction capacity, and supply diversification strategies.
Subsea7 has secured a subsea installation contract awarded by Shell for the Aphrodite gas project offshore Trinidad and Tobago, with operations scheduled for 2027.
Chinese ethylene producers are betting on a surge in US ethane arrivals in June as Beijing upholds tariff exemptions and bilateral talks resume.
With trading volumes five times higher than all other European markets combined, the Dutch gas hub TTF asserts itself in 2024 as a global benchmark, attracting traders, investors, and speculators far beyond Europe.
Slovakia is calling on the European Commission to regulate gas transit fees as the EU moves toward a ban on Russian imports by 2027.
Underground storage levels across Europe stand at just half capacity, widening the gap with EU winter targets amid intensified global competition for liquefied natural gas (LNG) supplies.
Norwegian group Equinor has sealed a gas supply deal with Centrica, covering nearly 10% of the United Kingdom’s annual demand over ten years.
MCF Energy Ltd. has provided an operational update on the Kinsau-1A well in Lech, Germany, indicating significant progress in preparing drilling operations for the third quarter of 2025.