No takers for costly spot LNG as price soars

Vol 24, PW 18 (29 Jul 21) Midstream, Downstream, Renewables
       

Unusually high LNG prices caused by a hot summer in Asia have hit LNG imports to India in June and July (2021).

Because of the high prices, GSPC has stayed away from the spot market, not bringing even a single cargo to Mundra over the past 60 days. The last shipment at Mundra was from Nigeria on May 30 (2021) aboard SCF Mitre, carrying 136,929 cubic metres.

Expect no respite from this situation for a while. On July 27 (2021), the JKM futures contract for September (2021) stood at $14.59; for October (2021) $14.53 and for November $14.94.

Both GAIL and Petronet-LNG also cancelled cargo tenders for delivery in July, August and later this year (2021). "Several tenders in June and July went unawarded," confirms a Petronet-LNG source.

Indian buyers are surprised that summer prices have touched winter levels. "The past 90 days have seen prices climbing up without a break," adds a GAIL source.

Three months ago, for example, GAIL landed an ADNOC cargo at Hazira for only $5.55/mmbtu. "Two factors explain the (spot LNG) price rise," says an LNG importer.

"Gas demand in China, Japan and South Korea is robust because of the hot summer and supplies were hit because of problems in some liquefaction plants." Temperatures in Beijing shot up to 25 degrees Celsius in February - far higher than usual.

In July, Japan's weather bureau issued heat stroke alerts as news reports claimed the Olympic games there could be the hottest on record. Several liquefaction projects also faced production, operation or maintenance problems: Cheniere Energy's Sabine Pass and Corpus Christi projects in the US, Australia's Ichthys facility, Petronas's Malaysia LNG project and the Bontang facility in Indonesia.

In the first six months (January to June) of the current calendar year (2021), 183 cargoes landed Indian terminals. From July 1 to 27 (2021), 26 shipments arrived at Indian terminals.

For a full breakdown of LNG cargo arrivals to India, with landing prices and volumes, subscribe to the LNG Dipla database from Petrowatch.com