Europe remains wary of long-term LNG contracts
European firms remain wary of long-term LNG supply contracts despite the sharp increase in LNG demand after the curtailment of Russian pipeline flows, industry experts told the Flame conference in Amsterdam this week.
"Long-term LNG contracts bring risks," head of continental Europe merchant trading at Axpo, Marco Saalfrank, said. There are risks in volume, for example the risk of Russian supply returning to the continent in 10-15 years, or the risk of gas demand falling faster than expected over the next decades, he said. And there are also price hazards because hedging at the back of the curve is harder, Saalfrank said.
As a result, European buyers largely hold fob offtake — rather than long-term des supply — which can be diverted to Asia if demand is weak. UK-based chemical firm Ineos only has 12pc of its long-term needs contracted and it is more exposed to competition for LNG cargoes with Asian firms, head of LNG at the firm's energy trading arm, Nicola Duffin, told the conference. The firm follows Asian LNG prices more closely than the Henry Hub, she said.
Europe's reticence to commit to long-term supply makes the financing of new US LNG exporting facilities harder, according to the chief executive of Gulfstream LNG, Vivek Chandra. "LNG is bullish everywhere else but Europe," Chandra said. But those emerging countries expected to lead demand growth in the coming decades still lack the financial means to take on long-term contracts, he added.
In any case, some progress has been made. Europe needs a lot of LNG to replace Russian gas, so there is a big gap that has not been contracted, but some new long-term contracts have been signed, the vice-president of strategy at Cheniere Andrew Walker said.
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Japan’s Jera to handle 35mn t/yr LNG until FY2035-36
Japan’s Jera to handle 35mn t/yr LNG until FY2035-36
Osaka, 17 May (Argus) — Japan's largest LNG importer Jera plans to maintain its LNG handling volumes at no less than 35mn t/yr until the April 2035-March 2036 fiscal year. Rising renewable power supplies and the possible return of more nuclear reactors are likely to pressure LNG demand from Japan's power sector. Jera consumed 23mn t of LNG in 2023-24, down by 3pc on the year, although it handled 35mn t through its global operations during the same year. But Jera needs to secure sufficient LNG supplies to adjust for imbalances in electricity supplies and ensure power security, through more flexible operations. It is also looking to further promote LNG along with renewable electricity in Asian countries, while helping to reduce their dependence on coal- and oil-fired power generators. The 2035 target for LNG is part of Jera's three pillars of strategic focus, along with renewables as well as hydrogen and ammonia , which was announced on 16 May to spur decarbonisation towards its 2050 net zero emissions goal. The company plans to invest ¥5 trillion ($32bn) for these three areas over 2024-36. Jera also aims to retire all supercritical or less efficient coal-fired units by 2030-31 . This would help achieve the company's target of cutting CO2 emissions from its domestic business by at least 60pc against 2013-14 levels by 2035-36. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Chinese importers seek five LNG cargoes for Jun-Sep
Chinese importers seek five LNG cargoes for Jun-Sep
Shanghai, 15 May (Argus) — Five Chinese importers, mostly second-tier buyers, are each seeking one LNG cargo for June-September delivery, according to an official notice published by China's national pipeline operator PipeChina on 15 May. The five importers are PipeChina, Chinese independent ENN, Hong Kong-listed city gas firm China Resources Gas, Hong Kong-based Towngas and state-owned China Gas. PipeChina and ENN have indicated a target price of at most $9.50/mn Btu for their intended cargoes, both for delivery to PipeChina's 6mn t/yr Tianjin terminal. China Gas has indicated a target price of at most $9.30/mn Btu for delivery to PipeChina's 6mn t/yr Beihai termial. China Resources Gas and Towngas have both indicated a target price of at most $9/mn Btu for delivery to PipeChina's 2mn t/yr Yuedong and Tianjin terminals, respectively. This consolidated requirement came about because of a need for PipeChina to better leverage on its infrastructure advantages and, at the same time, meet the varying needs of gas importers and consumers in the country. But this requirement comes at a time when spot LNG prices are still somewhat higher than the importers' targeted prices. But the importers can choose not to buy if offers are not within their expectations. The front-half month of the ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, was last assessed at $10.485/mn Btu on 15 May. Chinese importers mostly perceive spot prices below $9-9.50/mn Btu for June-September deliveries to be unattainable for now because there is strong buying interest from south and southeast Asia in particular. Indian state-controlled refiner IOC most recently bought LNG for delivery between 22 May and 15 June at around $10.60/mn Btu, through a tender that closed on 14 May. Thailand's state-controlled PTT most recently bought three deliveries for 9-10 July, 16-17 July and 22-23 July through a tender that closed on 13 May , at just slightly above $10.50/mn Btu. The most recent spot transaction was Japanese utility Tohoku Electric's purchase of a 10-30 June delivery at around $10.55/mn Btu through a tender that closed on 14 May . This is at least $1/mn Btu higher than Chinese importers' indications. Summer requirements have so far been muted but concerns among buyers about potential supply disruptions remain. Malaysia's 30mn t/yr Bintulu LNG export terminal suffered a power loss on 10 May, but this issue may have been resolved as of early on 15 May, according to offtakers. Some unspecified upstream issues may still be affecting production at the Bintulu facility, resulting in Malaysia's state-owned Petronas having to ask some of its buyers for cargo deferments, according to offtakers. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Brazil adds Asian indexation for flexible gas
Q&A: Brazil adds Asian indexation for flexible gas
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Sao Paulo state seeks biomethane boost
Sao Paulo state seeks biomethane boost
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