Gas Processing & LNG is Produced by Gulf Publishing Holdings LLC

LNG market poised for buoyant recovery with demand growing across Asia

LNG prices are poised for more gains as gas-hungry China guzzles cargoes to feed a rebound in economic growth while the easing of coronavirus-induced restrictions restores industrial demand in India.

Higher oil and coal prices have also helped lift global gas prices with spot Asian LNG prices doubling in just three months.

"We believe this has been driven by a tightening of Asian LNG balances led by strong generation demand in southern China at the same time that South Korea reached peak nuclear maintenance, while Covid-hit India LNG demand has stabilized," analysts from Goldman Sachs said in a note earlier this week.

China imported more than 7 million tonnes of LNG in May, a record for that month, and looks set to import more over the next two months driven by strong industrial activity.

"Fuel-switching (from coal) across households and businesses appears to have regained momentum after a brief hiatus, and now has an added policy boost ...that is heavily oriented around increasing clean fuels use and decarbonisation," Fitch Solutions said.

South Korea's newest and biggest nuclear reactor, Shin Kori-4, shut last month after a fire, which is expected to boost LNG demand. An official at operator Korea Hydro & Nuclear Power Co said it was not clear when the reactor would resume operations.


Tokyo Gas, Japan's biggest city gas provider, may boost storage capacity using LNG tankers, chief financial officer Hirofumi Sato told Reuters in April, potentially lifting imports. Utilities in Japan, the world's top LNG importer, faced a power crisis last winter which caused LNG prices to spike to record highs.

Temperatures in Tokyo, Seoul and Shanghai are expected to be warmer than usual over the next two weeks, according to Refinitiv Eikon weather data, further boosting gas demand in Japan, South Korea and China for power generation.

India's gas consumption is seen recovering in June after declining in the previous two months, as states ease restrictions in the wake of a drop in coronavirus infections, officials said this week.

Gas consumption in the world's fourth largest LNG importer could grow by 6% to 8% in the current fiscal year if the country emerges from the pandemic, Manoj Jain, chairman of GAIL (India), India's biggest gas pipeline operator, said.

Europe's LNG demand remains robust too, as imports are expected to refill storage levels which hit multi-year lows recently on pipeline supply concerns stemming from rising Russia-Ukraine tensions and a surging carbon market which may spur power producers to opt for LNG over coal, Fitch Solutions said. Supply issues, both planned and unplanned, plague some plants in the United States, Australia, Malaysia and Indonesia, and are also supporting prices, traders said.

That's crowding out some demand from price-sensitive buyers like Pakistan and Thailand, who have received only high offers for tenders seeking cargoes for July.

Overall, Asia LNG prices are expected to average about $7.30 per million British thermal units (mmBtu) in 2021 and $7.50 per mBtu in 2022, up from $4.20 per mBtu last year, said Kieran Clancy, assistant commodities economist at Capital Economics.

"The outlook for LNG demand further ahead remains bright, as it is used to plug the gaps in power generation that are not currently able to be met by renewables," he added.

(Reporting by Jessica Jaganathan, additional reporting by Yuka Obayashi in Tokyo and Heekyong Yang in Seoul; Editing by Gavin Maguire and Raju Gopalakrishnan)

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo


Editorial Comment
-Adrienne Blume
Facing regulatory uncertainty, competition from renewable energy and increasing calls for decarbonization, natural gas pipeline operators are studying the blending of hydrogen into their networks to produce lower-carbon methane and test their equipment’s capability for handling H2/methane blends.
Industry Focus: EastMed pipeline faces technical challenges, competition
-Eugene Gerden
The outcome of the EastMed pipeline project—a planned, 1,900-km (1,180-mi), subsea pipeline that would supply Europe with 9 Bm3y–12 Bm3y of natural gas from the Eastern Mediterranean—is being closely watched by many on the global stage.
Regional Focus: Africa’s floating LNG sector looks to regain footing post-pandemic
-Shem Oirere
The drive to harness natural gas reserves in Africa is supporting low-emissions energy generation and effective monetization of marginal and small gas fields.

Throughput optimization for pipelines and gas plants

Register Now

Many processes within oil and gas pipelines and processing plants depend on maintaining specific temperatures and pressures at which the process fluids are liquids or gases. In addition, anytime water is a component in the process fluid hydrates can form and plug piping and vessels. Learn how Sensia’s Throughput optimization solution allows operators, and control systems to “see inside” the process in real time to understand where the facility is operating with respect to critical physical constants, including the phase envelope and hydrate temperature. This insight allows for more stable operation, reduced energy expenditure and associated emissions, and greater facility throughput. Case studies will include controlling methanol injection, managing heaters, virtual sensors for sulfur recovery units and more.

April 1, 2021 10:00 AM CDT

Register Now


Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2021 Gulf Publishing Holdings LLC.