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Weekly Summary

LNG: Jan 10-14: Severe impact from Petronas supply cancellations

--DES Northeast Asia

 Some Japanese power and city gas companies as well as Korean and Chinese energy companies had their long-term cargoes cancelled by Petronas due to production problems at the Bintulu project in December, as was previously reported. Although production at the Bintulu project was expected to recover from February, Petronas did not withdraw the cancellation of cargoes for December to January delivery. As a result, many long-term customers had no choice but to buy alternative cargoes. The impact was severe since as many as 20 cargoes for December to January delivery were believed to have been cancelled by Petronas. Prices of long-term cargoes that were supposed to have been supplied were at around $10.00 or $11.00-12.00 at most but the cost of purchasing spot cargoes for December to January delivery was as high as more than $40.00. The price difference between long-term cargoes and spot cargoes was $20.00-30.00. Therefore, the impact on long-term customers that had to purchase alternative cargoes was severe.

 

--FOB Middle East, DES South Asia, South east Asia and the Middle East

 From the 78.00 mil mt/year Ras Laffan project in Qatar, Qatargas reduced supply to the 15.40 mil mt/year South Hook terminal in the UK. Qatar Petroleum (QP), its parent company which has usage right of the terminal, was refraining from sending cargoes to South Hook and reportedly gave priority to supplying to its long-term customers in South Asia and Europe. Qatargas supplied four cargoes in October and five cargoes in November from the Ras Laffan project to the South Hook terminal. Qatargas, however, did not supply cargoes to the terminal in December. A European trader mentioned, "Many long-term customers exercised upward quantity tolerance (UQT) and increased intake of winter cargoes from Ras Laffan. As a result, supply room of Qatargas decreased."

 

--FOB Atlantic, DES Europe and South America

 Russia's Novatek is constructing the new 19.80 mil mt/year Arctic LNG 2 project, on the opposite shore of the 16.50 mil mt/year Yamal project. The No.1 liquefaction train at the project was scheduled to start partially from 2023 and operate at full capacity in 2025. Mitsui and JOGMEC invested in the project and hold 10% of equity. A Northeast Asian end-user said that the Arctic LNG 2 project aimed to sell LNG mainly to Asia but supply would be sent to the Atlantic as well during the winter season.

 

Tokyo : LNG Team  Yanagi   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.