August 18, 2022

WWW.ENERGYINTEL.COM

China's LNG Imports Slump Again in July, Down 20% On Year

China imported 4.74 million tons of LNG in July, a 15.4% drop from a year ago, according to latest customs data.

The country’s LNG imports have been falling for seven consecutive months this year, bringing its total imports year to date to 35.93 million tons, down 20.3% from a year ago.

China’s Covid-zero policy, slowing economic growth and high LNG prices have led to a deceleration in the country’s LNG import growth. Last year, China became the world’s No.1 LNG market, but it is expected to lose this status to Japan this year.

Despite an overall decline in LNG imports, China met its gas demand through higher domestic gas production and higher LNG and pipeline gas imports from Russia that are less expensive.

Russia’s LNG exports to China grew 29% on the year to 2.4 million tons in the first half of 2022, Chinese customs data showed. In the first five months of 2022, Gazprom might have supplied some 6.3 Bcm to China, up 67.5% on the year, Energy Intelligence calculated earlier.

The growth is in line with the planned ramp-up of the Power of Siberia pipeline exports that started in late 2019, but Gazprom says it now supplies above the contractual daily volumes agreed at around 41 million cubic meters per day, or 15 billion cubic meters per year.

Covid-Zero Impact

Analysts expect China to persist with its Covid-zero policy, which would continue to drag down its growth. Goldman Sachs this week downgraded its 2022 full-year forecast for China’s GDP to 3.0% from 3.3%, while Nomura slashed its full-year projections to 2.8% from 3.3%.

In its recent gas report, Paris-based International Energy Agency said it expects China’s natural gas consumption to slow markedly to 3% in 2022, compared with 12% in 2021, driven by a strong rebound in economic activity and weather-related factors. This would be the lowest rate since 2015 and reflects the impact of high LNG import prices, it said.

China’s cost of LNG imports increased by 45.5% year-on-year in the first seven months of this year.

Chinese buyers have largely stayed away from the spot market as Asian prices passed the $50 per million Btu level this week. Some Chinese importers have secured LNG supply through long-term contracts and resold their contracted volumes to take advantage of high spot prices for profit maximization.

China's Gas Consumption
Domestic Production (Bcm)Y-o-Y %Chg.Total Gas Imports (million tons)Y-o-Y %Chg.LNG Imports (million tons)Y-o-Y %Chg.Pipeline Gas Imports (million tons)Y-o-Y %Chg.
Jan-Feb37.26.7%19.9-3.8%12.7-8.7%7.26.3%
Mar19.76.38.0-8.54.6-17.03.48.8
Apr17.74.78.1-20.34.4-34.53.79.3
May17.74.99.1-10.64.9-28.14.226.0
Jun17.30.48.7-14.64.8-26.03.911.5
Jul17.18.28.7-6.94.7-15.44.08.0
Total126.75.4%62.2-9.6%35.9-20.3%26.310.8%

Clara Tan, Singapore and Dawn Lee, Beijing, China

Poland's PGNIG Imports Soar 33% As Russian Piped Gas Halted

Poland’s PGNIG imported 33% more LNG, or a total of 2.72 Bcm, in the first half of 2022, following a complete halt of Russian pipeline gas imports into Poland since April.

Gazprom cut off supplies to PGNIG on Apr. 27 after the Polish company refused to pay for its gas in rubles. PGNIG was already preparing not to renew its 10 Bcm/yr Yamal pipeline gas supply contract with state-owned Gazprom, which expires this year.

PGNIG said the share of LNG imports as part of its total gas imports rose to 34% from 25% in the same period in 2021.

PGNIG received three LNG cargoes into Lithuania’s Klaipeda import terminal during the first half of the year, since shipping its first vessel to Lithuania in May.

The share of piped imports from Russia fell to 37% of total gas imports from 58% a year before. In volume terms, PGNIG’s Russian imports fell 38% on-year to 3 billion cubic meters.

Piped imports from non-Russian sources also grew to a 29% share compared to the previous year’s 17%.

Total gas and LNG imports fell 3% on-year to around 8 Bcm in the first half, PGNIG said.

PGNIG’s first-half net profit almost doubled to Zloty 4.84 billion ($1.03 billion) following higher oil and gas prices supporting its upstream business.

The company produced 3.48 Bcm of gas during the first six months of 2022, compared to 2.34 Bcm during the same period in 2021. PGNIG’s own production offshore Norway rose from 0.39 Bcm to 1.54 Bcm in the first half.

PGNIG expects to ship Norwegian gas directly to Poland through the 10 Bcm/yr Baltic Pipe project, which is expected to start limited operations in October.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact
Jaime Concha, Copenhagen

Cargo Loadings on Halt at Cameroon FLNG Plant

Cameroon’s floating LNG export plant has not loaded a single cargo for a month, which suggests that the facility is likely undergoing maintenance or experiencing an outage.

The 2.4 million ton per year FLNG plant, located offshore the port town of Kribi, generally loads one to two cargoes per month.

However, it last loaded a cargo on Jul. 21 and it looks unlikely that it will perform any loading during the rest of this month, with no ballast vessels waiting nearby, according to ship-tracking data by commodity analytics firm Kpler.

Some market sources suspected that the lull in cargo loadings is due to a maintenance, although this could not be confirmed.

Sole Offtaker

Sefe Marketing & Trading, previously known as Gazprom Marketing & Trading, is the sole term offtaker from the plant through a contract with state-owned Societe Nationale des Hydrocarbures (SNH) and independent producer Perenco for 1.2 million tons per year of LNG.

Indeed, it was the Sefe M&T’s 173,400 cubic meters Energy Integrity vessel that lifted the last cargo from the Cameroonian plant.

The vessel has only been used to transport cargoes from Cameroon since it was delivered to the company last year.

But after delivering the last Cameroonian cargo to the French Dunkirk terminal last week, the vessel sailed toward Belgium’s Zeebrugge terminal and is currently waiting outside the facility. This could indicate that it will be reloaded with a cargo from the Belgian terminal.

Another vessel of Sefe M&T, the 174,000 cubic meters Energy Intelligence, is currently located offshore Singapore, after delivering a reloaded cargo from Zeebrugge to China’s Ningbo terminal earlier this month. The vessel last loaded from Cameroon in early May, according to Kpler data.

Meanwhile, another two ballast vessels of the company, the Velikiy Novgorod and the Pskov — both with 170,200 cubic meters of capacity — are currently heading west in the Mediterranean Sea.

Sefe M&T and Perenco had not responded to request for comment by press time.

TTF-Linked Production

Rocketing prices on the European benchmark Dutch TTF market are set to generate large profits for Bermuda-based shipping firm Golar LNG, the owner of the Hilli Episeyo FLNG unit in Cameroon.

Golar announced at the end of July that SNH and Perenco exercised their optional TTF-linked production volumes of 0.2 million tons/yr from 2023 to July 2026, when the current charter agreement for the Hilli Episeyo expires.

“Based on current average 2023 TTF gas prices ($45.49/MMBtu) the 0.2 million tons/yr of production can generate $135 million of incremental annual adjusted EBITDA to Golar. For each $1.00/MMBtu change in TTF, this adjusted EBITDA will increase (or decrease) by US$3.2million”, Golar said in a statement Jul. 27.

Since then, the continued supply fears in Europe have propelled TTF prices further, and most TTF monthly contracts for 2023 are now trading well-above €200 per megawatt hour ($59.35/MMBtu).
Daniel Stemler, Madrid


In Brief

Kenai LNG Conversion Project Granted 3-Year Reprieve

US regulators this week granted Marathon Petroleum's Trans-Foreland Pipeline an additional three years to convert the Kenai LNG export plant in Alaska into an import terminal.

The Federal Energy Regulatory Commission (FERC) approved the company’s request for an extension until December 2025.

Trans-Foreland has not made a final investment decision on the conversion, but FERC, which approved the project in 2020, said it granted the extension based on the assumption that the project “remains commercially viable” and the firm is “actively seeking suitable supplies and monitoring LNG markets.”

The Kenai LNG export plant began operating in 199 but has not shipped any LNG abroad since 2015.

Trans-Foreland’s plans call for the facility to import up to four tankers of LNG annually. The LNG would be regasified and delivered to the nearby Kenai oil refinery.

Staff Reports


Data Snapshot

LNG Netbacks at Key Receiving Terminals

LNG Exporter Netbacks Between Key Receiving Ports
($/MMBtu)AlgeriaAustralia WestAustralia EastMalaysiaNigeriaNorwayOmanPeruQatarRussiaTrinidadUS GulfUS East Coast
Dahej, India48.3948.8348.4548.8248.0647.8849.2947.5649.2048.4947.7347.4647.80
Sodegaura, Japan49.0850.4350.4550.5449.0545.7550.0748.0149.9450.8848.3247.5149.22
Zeebrugge, Belgium47.9246.3145.9446.3947.4247.7747.0545.9446.9145.9547.5446.6447.63
Huelva, Spain55.1353.4953.1053.5754.5954.3854.2353.0254.1053.1154.6553.6354.66
Isle of Grain, UK44.8343.2642.8943.3244.3744.6844.0842.8943.8542.9044.4743.5944.55
Everett, US7.656.426.716.467.417.310.017.056.876.157.81----
Created with Highcharts 9.0.0($/MMBtu)QATAR TO NORTHEAST ASIANetbackNetback14. Mar28. Mar11. Apr25. Apr9. May23. May6. Jun20. Jun4. Jul18. Jul1. Aug15. Aug102030405060Energy Intelligence

LNG Market Indicators

Spot LNG Pricing
Latest WGIDailyDaily Chg.Chg. From Latest WGI
NE Asia0.0051.640.4451.64
SW Europe0.0055.820.6055.82
Futures Pricing
($/MMBtu)Chg.LatestPreviousWeek Ago
Henry Hub, US (futures)-0.069.199.248.87
NBP, UK (futures)+1.9354.9553.0148.40
European Spot Pricing
Chg.LatestPreviousWeek Ago
Dutch TTF3.5869.9066.3361.11
Zeebrugge (Belgium)2.9740.1637.1841.65
German NCG1.6068.7367.1361.32
NBP (UK)0.6045.6745.0740.73
US Markets
US Spot Prices
Sabine Pass, Louisiana-0.099.429.518.53
Corpus Christi, Texas----8.918.23
Cove Point, Maryland-0.058.398.447.47
Elba Island, Georgia--------
Nymex Henry Hub Futures
Near Month-0.069.199.248.87
Second Mth-0.069.179.238.86
Third Mth-0.059.249.308.94
Created with Highcharts 9.0.0($/MMBtu)GLOBAL GAS PRICINGUS NymexDutch TTFNE AsiaSep '21Oct '21Nov '21Dec '21Jan '22Feb '22Mar '22Apr '22May '22Jun '22Jul '22Aug '22020406080Energy Intelligence