United States LNG Exports Reach Third Place

[Tom Nolan + 2,443]

Bloomberg via Yahoo - Sunday January 10th

As Polar Vortex Stirs, a Deep Freeze Threatens U.S. and Europe

https://finance.yahoo.com/news/polar-vortex-stirs-deep-freeze-120000844.html

 

 

Brian K. Sullivan

Sun, January 10, 2021, 6:00 AM CST·3 min read

(Bloomberg) -- High in the atmosphere above the North Pole, a spike in temperatures may soon send bone-rattling chills spilling down through the Northern Hemisphere.

The icy blasts threatening to sweep across North America, Europe and Asia starting in late January are from the same weather pattern that triggered the 2014 cold snap known as the polar vortex, which plunged temperatures in Chicago to minus 16 degrees Fahrenheit (minus 27 Celsius).

It’s common during winter for frigid air to roar down from the Arctic. But the cold mostly stayed bottled up around the North Pole in the season of 2019-2020. Now, after a nearly two-year hiatus, winter is threatening to return at last.

“Things are really setting up for an exciting period for cold and snow,” said Todd Crawford, lead meteorologist with the Weather Co., an IBM business.

To be clear, forecasters aren’t expecting the cold to be as brutal as during the 2014 polar vortex, which was an extreme example of Arctic weather marauding south. But it will feel unmistakably like winter.

The cold has already descended upon Western Europe and China, sending prices for gas in Spain, and liquefied natural gas in Asia, to record highs. Paris has been 3.5 degrees below normal and Madrid 6.9 degrees cooler, while Beijing temperatures fell to a record low of minus 9 Thursday, said Tyler Roys, a meteorologist at AccuWeather Inc.

The vortex of seven years ago kept shoppers indoors, grounded flights and made it harder for shippers to fill product orders. This year, the pandemic has already hobbled travel and in-store shopping. Snowstorms, however, could be a nightmare for delivery services.

Technically, the polar vortex refers to a band of winds that encircle the Arctic and keep the cold locked far to the North. But with that temperature spike, known as sudden stratospheric warming, the band can buckle, allowing frigid air to head south. Gas traders used to call it the “polar pig.”

That could mean chills anywhere in the Northern Hemisphere, though this year it’s likely to end up in the U.S. according to Ryan Truchelut, president of Weather Tiger LCC. A wave of deep cold could give the Great Lakes and East Coast their first real blast of frigid winter weather, along with a storm pattern that delivers snow storms as well.

It will be a big shift for the U.S., where winter has been a bit lackluster so far. In New York, January readings have been 5.1 degrees above normal through Thursday, and Chicago has been 7.2 degrees warmer for the month.

Still, there’s no guarantee it will happen. While a sudden stratospheric warming usually leads to a burst of frigid weather, sometimes the clockwork of gears in the atmosphere doesn’t deliver.“Many times in the past, the forecast for a cold weather event across the country resulted in a false alarm,” said Jim Rouiller, lead meteorologist with the Energy Weather Group LLC.

 

[Tom Nolan + 2,443]

Natural Gas Price Fundamental Daily Forecast – Bearish Weather Outlook to Weigh on Demand

Look for counter-trend buyers on the first test of $2.500 to $2.445. They are going to try to form a potentially bullish secondary higher bottom.

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-bearish-weather-outlook-to-weigh-on-demand-693485

James Hyerczyk

10 minutes ago (Jan 11, 2021 3:46 PM GMT)

Natural gas futures are trading lower on Monday and for the first week in three, there was no gap on the opening. This suggests that traders were anticipating warming trend that was essentially confirmed in the forecasts from over the weekend.

Although the market opened lower, there hasn’t been too much of a follow-through to the downside. This could be because traders anticipate another round of colder temperatures for key U.S. demand areas later this month.

At 15:20 GMT, March Natural Gas futures are trading $2.602, down $0.054 or -2.03%.

Weather Remains the Focus

EBW Analytics Group said the current weather models see “the earliest cooling by nearly a week” and a “large loss in natural gas demand” for the next two storage weeks.

“Further, even with the bearish weekend model shift, the year/year storage surplus is still likely to largely evaporate this month,” they said. “While futures are initially trading lower this morning, therefore, they could still hold onto some of last week’s gain.”

Bespoke Weather Service’s forecast didn’t vary much from the EBW outlook.

“The nearer-term forecast, with no quality cold source anywhere in North America, rolled forward warmer,” Bespoke said. “…Once we do see a true cold source develop up in Canada, it looks to impact the less populated western U.S. rather than the eastern half, keeping national demand no better than near normal in such a scenario.”

This led the firm to remove 15 gas-weighted degree days from its projections compared to Friday’s forecast, Natural Gas Intelligence (NGI) wrote.

Still, “models do maintain some negative North Atlantic Oscillation tendencies into late month” that could lead to some cold in the West shifting eastward. This “keeps the medium-range pattern interesting, and could mean some additional run-to-run model volatility this week,” Bespoke said.

Short-Term Weather Outlook

According to NatGasWeather for January 11 to January 17, “A slow moving weather system will bring rain and snow to Texas and the South the next couple days with cool highs of 30s to 50s. The rest of the U.S. will be cool to start Monday with lows of 0s to 30s for moderate demand, then warming above normal the rest of the week into the 40s to 70s for light demand. Demand will moderately increase next weekend as a weather system/cold shot sweeps across the Great Lakes and extends to the Southeast with heavy showers, although countered by warmer than normal temperatures most elsewhere. Overall, moderate demand today, then low the rest of the week.

Daily Forecast

The main trend is down and downside momentum seems to be increasing. We’re looking for the selling to extend into $2.500 to $2.445 over the short-run.

Watch for aggressive counter-trend buyers on the first test of $2.500 to $2.445. They are going to try to form a potentially bullish secondary higher bottom.

A break through $2.445 will indicate the selling pressure is increasing which sets up the possibility of an eventually retest of $2.268.

On the upside, a pair of main tops at $2.732 and $2.750 is resistance. This is followed by the main 50% level at $2.794.

For a look at all of today’s economic events, check out our economic calendar.

~~~~~~~~~~~~~~~~~~~~~~

LIVE CHART LINK  - https://tradingeconomics.com/commodity/natural-gas

[Coffeeguyzz + 454]

As of mid day, Monday January 11, JKM spot hit a record $28/mmbtu, which is a ~30% increase over Friday's record $20/mmbtu.

Trader Trafigura bid $36 for a prompt delivery.

 

Related, the 10 mtpa LNG plant in Goldboro, Nova Scotia is proceeding towards ground breaking.

This year ought to see several other projects proceed to FID with ship builders increasing their bookings for more new builds.

Spot carrier charter rates vary from $215,000/day to $165,000/day depending upon propulsion systems.

Should not be surprising to see a change in approach/attitudes within the LNG universe as the highly disruptive effects of cold snaps manifest throughout the supply and consumer chains. Spot Indian prices are so high that utilities are cutting back both power production and distribution. Meanwhile, contractually structured operations are chugging along with no  meaningful disruption.

Edited January 11, 2021 by Coffeeguyzz

[Tom Nolan + 2,443]

[NOTE - OILPRICE.COM is referred to in this Zero Hedge article]

Natgas Prices In Asia And Europe Sky-Rocket Amid Deep Freeze 

https://www.zerohedge.com/commodities/natgas-prices-asia-and-europe-sky-rocket-amid-deep-freeze

he price of LNG reached unprecedented lows in the spring of 2020; but, as OilPrice's Venand Meliksetian points out, a year later, the revitalization of the market is a fact. Prices of the supercooled fuel in especially Asia have reached astronomic heights due to a combination of factors.  The most important LNG buyers-markets are in Asia and Europe. The latter, however, also enjoys a well-developed crossborder pipeline infrastructure that connects producers in Russia, North-Africa, and the Caspian to consumers. Asia, on the other hand, is much more dependent on LNG. Therefore, the top three largest importers are all Asian: Japan, China, and South-Korea.

The rise in LNG prices has several explanations.

First, economic activities have remained relatively strong in Asia throughout the year. China was the first country to experience a lockdown in February 2020 due to the spread of the Coronavirus. Other East Asian countries also implemented rapid and aggressive measures to mitigate the health crisis. The economy experienced a rebound while most countries were still grappling with the pandemic. Demand for commodities such as LNG, therefore, has remained strong.

More important, however, is the cold winter weather. BAMWX meteorologist Kirk Hinz first alerted us about a massive spike in temperatures happening miles above the North Pole, resulting in a sudden stratospheric warming event (SSWE) splitting the polar vortex into two. This means Arctic temperatures are pouring into parts of Asia and Europe, at the moment, sending natural gas prices in those regions sky-high. 

Bloomberg's Javier Blas tweeted Monday that "LNG Asian benchmark JKM has jumped to a fresh all-time high of $28.2 per million British thermal units, up 32% from Friday" due to increased power demand because of the cold weather in the region.

Last week, China's power demand surged as Arctic air blanketed parts of the country, sending power demand to record highs. 

While prices have soared in Asia, Europe is also feeling the pinch despite its cross-border pipeline infrastructure. Cold winter weather in general and Covid-19 have increased consumption as people remain inside. The high prices in Asia have echoed through Europe where the gas benchmark hit a two-year high.

On Monday, British wholesale gas prices surged to their highest levels since December 2018, or about a two-year high, due to colder weather. 

Forecast temperature deviations for Europe show much of the continent will continue experiencing colder than average temperatures for the month. 

However, as Meliksetian notes, it is uncertain whether prices will remain high in the long term. Although the beginning of the end of the pandemic is in reach due to the arrival of vaccines, long-term economic predictions remain bleak. It could take years before the economy and demand for LNG are what they were before the pandemic.

Russia's export to Europe, for example, hovered around 200 bcm for the last couple of years. For 2021, however, the expectation is that ‘just’ 170 bcm will be exported with an increase to 183 bcm in 2022. This shows the dire state of the market in at least Europe in the short to medium term. 

The room for growth in Asian markets makes these countries even more important for LNG exporters. China already is on the brink of unseating Japan as the world's largest importer. The expanding market is not limited to East Asia. Countries in the south, such as India and Pakistan, are also gaining importance. The LNG market, however, remains highly volatile especially as the economic consequences of the pandemic are not yet fully understood.

And that surging cost could be coming home soon, as BAMWX's Hinz has pointed out, high impact cold and storminess across the eastern US and Canada is next? 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

(one minute video)

Spain blanketed in heavy snow as record-breaking blizzard brings Madrid to standstill

 

[Tomasz + 1,608]

According to Kommersant today Asian JKMC spot prices reached 1170 $ per 1.000 m3.

7 or 8 months in May ago spot prices were about 70 $ per 1.000 m3.

I dont have anything to add.

May prices and January prices are not based on  supply/demand balance  but purely on speculation.

Today Novatek according to Kommersant  will send couple of LNG carriers by North Sea Route to get some revenue in a peak of winter for first time from Yamal without icebreaker protection and therefore it is a sign of the times.

https://www.kommersant.ru/doc/4639727

Quote

 

Prices are such that ice cracks

Yuri Barsukov on how Russian gas gets to Asia

Taking advantage of the record-breaking spot prices for liquefied gas in Asia, NOVATEK decided to launch an experimental voyage in January, sending its LNG tankers via the Northern Sea Route along the eastern route without icebreaker escort. So, on January 5, the Christophe de Margerie tanker left Sabetta on the Yamal Peninsula, followed by Nikolay Evgenov on the 6th. The tanker "Nikolay Zubov" left Tianjin in China to meet them and was to arrive in Sabetta through the Bering Strait. By now, tankers have almost met in the area of the New Siberian Islands.

The point of such oncoming traffic is for the vessels to share data on ice conditions with each other and to optimize the further part of the route. Christophe de Margerie plans to arrive in Dalian on January 26, completing the route in 21 days versus 36 days that would be required for a route around Eurasia via the Suez Canal. In addition, NOVATEK will save on transshipment and tanker freight costs.

This is the first time that ships travel east along the Northern Sea Route in winter without icebreaker assistance.

If the experiment is successful, it will demonstrate the practical possibility of supplying Yamal gas to Asia even without nuclear icebreakers for nine months a year, with the exception of March-May, when ice conditions in the Arctic are most difficult.

In principle, the main problem for Arc7 gas carriers is not to get through the ice of the eastern Arctic, but to do it at an acceptable commercial speed. However, given the current abnormally high gas prices in Asia, which are approaching $ 800 per thousand cubic meters and 2.5 times higher than in Europe, supplies to Asia via the NSR will be profitable in any case.

In the longer term, the situation is not so obvious. In the past two years, there has been so much LNG on the market, including through new production in the US, that the historically existing excess of LNG spot prices in Asia over European prices has essentially disappeared. It seemed that there was almost a single gas market in the world, and LNG flows from one region to another would quickly neutralize significant geographic “premiums”.

This state of affairs called into question the logistics strategy of NOVATEK, aimed at maximizing the use of the route through the eastern Arctic.

Indeed, why build a transshipment hub in Kamchatka, new gas carriers and icebreakers, if it is possible to withdraw all the gas in half the number of vessels - since the transport shoulder is shorter - to Europe and sell for about the same money. However, this winter demonstrates that the geographical boundaries of the markets still remain - for example, due to the low throughput capacity of the Panama Canal, now LNG from the United States is physically unable to directly enter Asia in full and reduce the resulting giant "Asian premium".

 

 

Edited January 12, 2021 by Tomasz

[Tom Nolan + 2,443]

Visualizing North Dakota Oil & Gas Production (Through November 2020)

https://community.oilprice.com/topic/22267-visualizing-north-dakota-oil-gas-production-through-november-2020/

 

[Wombat + 1,028]

On 12/21/2020 at 11:36 PM, Boat said:

You cannot call gas from flared wells clean. Kinda like clean coal. Trump speak for give me money for policy in return for support. 
This distorts market costs unfairly for those who do capture and sell their gas.

Boat, for once I agree with you. No such thing as clean natural gas. However, it is still cleaner than coal, which also emits methane in the mining process, and more to the point, the infrastructure to handle natural gas will enable the utilisation of green H2 in the future. That is why NG is referred to as a "bridging fuel".

[Wombat + 1,028]

On 12/22/2020 at 8:21 AM, Tomasz said:

Well some facts about Russia

Currently, in Russia, there are 102 hydropower plants with a capacity of more than 100 MW. The total installed capacity of hydro-power units at Russian HPPs is approximately 45 million kW, whereas generation is approximately 165 billion kWh per annum. HPPs account for 20.6% of Russia's total electricity production.

Taking this into account, Russia is certainly one of the leading producers of green electricity

I am glad to hear that Russia is investing in Yellow H2. I think France should do the same.

[Tom Nolan + 2,443]

LNG Price Boom Obliterates Rally In Bitcoin

By Charles Kennedy - Jan 13, 2021, 1:00 PM CST

https://oilprice.com/Energy/Natural-Gas/LNG-Price-Boom-Obliterates-Rally-In-Bitcoin.html

Spot prices of liquefied natural gas (LNG) in Asia have staged an impressive rally over the past two months and have now soared 18 times from April 2020 lows—and the surge is obliterating even the recent rally in Bitcoin prices, according to Bloomberg.  

A perfect storm of unusually cold winter in north Asia, outages at major LNG exporters, and logistical and shipping constraints had driven the price of Asia’s LNG benchmark, the Japan-Korea Marker, to the highest on record, at $21.45 per million British thermal units (MMBtu) on Friday.

This week, the price shot further up to over $30/MMBtu to a new high since the assessment of the benchmark began in 2009.

LNG cargoes on the spot market have recently gone for six-figure sums. According to Bloomberg, ExxonMobil sold last week a cargo to Japan for a record $130 million, while Total sold an LNG cargo to commodity trader Trafigura for $126 million.

The record-high prices are not expected to last long, as cargoes for March delivery on the spot market are already half the price of those for February delivery. Nevertheless, the combination of several factors caught the market by surprise in late 2020 and early 2021, with LNG exporters on the spot market and the LNG tanker owners raking in insane profits.

At the start of 2021, a cold snap in Asia and Western Europe continued to drive natural gas and LNG prices higher, while unplanned supply issues at major exporters, including Qatar, Australia, Norway, and Malaysia, are also driving LNG prices higher.

In Spain, home of one of Europe’s biggest terminals, LNG prices also surged amid an unusual cold snap in the country, which brought a rare snowfall in Madrid.

Shell has recently restarted the production of LNG at its Prelude offshore project in Australia after almost a year’s suspension. The restart of the 3.6-million-ton facility comes at the best possible time. The cold spell in Asia has pushed LNG prices through the roof, erasing worry about an oversupplied market as Chinese buyers struggle to stock up on the fuel.  

By Charles Kennedy for Oilprice.com

 

[Tom Nolan + 2,443]

Referring to Charles Kennedy's article above...

Bloomberg

LNG Cargo Prices Rising Faster Than Bitcoin

https://finance.yahoo.com/news/lng-cargo-prices-rising-faster-090636451.html

[Tom Nolan + 2,443]

Goldman Flips On NatGas, Warns Of Bullish "Perfect Storm" 

Wednesday, Jan 13, 2021 - 15:07

https://www.zerohedge.com/commodities/goldman-flips-natgas-warns-bullish-perfect-storm

Goldman Sach has flipped on their bearish natural gas stance to a bullish one. 

Goldman's Samantha Dart's reasoning behind the view shift is due to a combination of factors including "supply disruptions, shipping delays, and strong LNG demand, supported by heavy nuclear maintenance in Japan and a cold start of the year in NE Asia, have significantly tightened the LNG market." 

Prices of the supercooled fuel in especially Asia have reached astronomic heights in recent days. The most critical LNG markets are in Asia and Europe, which comes as a polar vortex split that has dumped Arctic air in both regions, boosting natgas prices.  

Goldman points out LNG Asian benchmark JKM has jumped to a fresh all-time high of $32/mmBtu today as the "market struggle to ration demand while supply takes weeks to move incremental Atlantic Basin supply into Asia." 

While LNG prices are soaring in Asia, cold weather in Europe has led to the Dutch Title Transfer Facility (TTF) physical short-term gas and gas futures contract to soar 29% higher to $9.43/mmBtu in the last two days. Goldman suggests that "even deeper-than-expected drop in NW European LNG deliveries, we now see European balances even tighter." 

Colder-than-average temperatures have provided significant support for European natgas demand. 

"TTF price forecasts skewed to the upside," Goldman said, adding that it's due to "weather-driven tightness realized thus far." 

We see risks to our revised TTF price forecasts skewed to the upside as, given the LNG and weather-driven tightness realized thus far, we believe that even a warm turn to the weather would not be enough to take this year's storage path towards a capacity breach. This effectively eliminates the risk that TTF may need to sell off this winter to once again close the US LNG export arb.

Hence, with warm weather risks less relevant, we update our weather scenario analysis to focus on colder-than-average scenarios only. Importantly, our previous iteration of this analysis had already shown the explosive potential for TTF prices. -Goldman

Colder weather in Europe has also resulted in Spanish natgas prices hitting a record high. 

On Monday, British wholesale gas prices surged to their highest levels since December 2018, or about a two-year high, due to colder weather. 

Forecast temperature deviations for Europe show much of the continent will continue experiencing colder than average temperatures for the month. 

The colder weather in Europe has driven power prices to record highs. About 40% of the electricity consumed in the continent comes from fossil fuels, such as natgas.

ELECTRICITY MARket

Power prices are blowing up around the world. Not just in Japan, but also in Europe. In the UK, day-ahead 5-6pm electricity prices just zoomed to an all-time high many, many, but really many times above normal auction levels.

While natgas prices are surging in Asia and Europe, US LNG export arbitrage continues to widen.

Goldman "believes this provides no incremental tightening of US gas balances, as we already expected US liquefaction facilities to operate near capacity throughout the year."

Supposedly, the smartest people in the room also believe there will be "significant upside to NYMEX gas prices this summer to help correct what we see as a 2.5 Bcf/d imbalance in the market through Oct21. Accordingly, we maintain our $3.25/mmBtu 2021 summer US gas price forecast vs. forwards at $2.80." 

And that surging cost could be coming home soon, as BAMWX's Hinz has pointed out, high impact cold and storminess across the eastern US and Canada is next? 

 

[Coffeeguyzz + 454]

Trafigura just paid $39.30/mmbtu for a cargo today.

Japanese utility is buying the ~5,000 cbm "heel"  - residual LNG remainining in carriers after delivery to maintain temperature in holds - so as to obtain every last bit of product.

 

These crazy, crazy events will be referenced for years to come and will exert enormous influence on decision making/planning going forward.

[Tom Nolan + 2,443]

Visualizing Permian Oil & Gas Production (Through October 2020)

shaleprofile 34 minutes ago in Oil (General)

https://community.oilprice.com/topic/22307-visualizing-permian-oil-gas-production-through-october-2020/

 

[Tom Nolan + 2,443]

Bitter Cold Means Chaos as Global Energy Systems Show Strain

Rachel Morison - Bloomberg

Fri, January 15, 2021, 8:12 AM·5 min read

https://finance.yahoo.com/news/bitter-cold-brings-chaos-global-072341642.html

(Bloomberg) -- Freezing weather that’s sweeping the northern hemisphere is causing chaos in energy markets and damaging infrastructure with households from Japan to Pakistan and France being asked to curb their electricity use.

In Asia, extreme cold prompted record-high power demand and a scramble for natural gas to keep the lights on in China, Japan and South Korea. In Sweden, a utility is paying for hotels for its customers after heavy snow brought down sections of the power grid cutting supplies while French households were advised to delay doing their laundry to save energy.

The extreme, widespread cold took markets by surprise. The spikes in energy demand during the bitter winter, coupled with weak wind generation, power plant closures and liquefied natural gas tanker delays highlighted the shortcomings of global energy systems in weather conditions that are only set to get more volatile.

There could be more to come. A relatively rare weather phenomenon with the potential to disrupt the polar vortex -- the winds that usually keep cold air contained in the far north -- is threatening to send an Arctic blast across North America, Europe and Asia from late January.

“The distortion of the polar vortex appears to be prolonging the severe winter conditions in some northerly areas and potentially Europe,” said David Thomas, independent adviser and former head of LNG at Vitol Group. “It may not be over just yet. Several companies are feeling the pain and the elevated power prices must be hurting large consumers.”

The extreme conditions left some energy traders and utilities flat-footed, sending prices for electricity, fuel and vessels to record highs.

In Asia, LNG spot rates jumped 18-fold from last year’s lows and helped send European gas prices to a 12-year peak. Britain’s national grid was forced to issue numerous appeals for generators to increase output as low wind generation coincided with the cold snap and pushed wholesale electricity prices for peak periods to more than 1,000 pounds ($1,367) a megawatt hour.

European gas markets like the U.K. and Spain, which don’t have large amounts of gas storage, and are more dependent on the “incredibly tight global LNG market are more exposed if below normal temperatures are sustained,” said James Huckstepp, manager for EMEA gas analytics at S&P Global Platts.

Lights Out

China is struggling to keep the lights on after some of the lowest temperatures since 1966 boosted domestic demand just as manufacturing ramped up after the pandemic. Ice is also wreaking havoc on grid infrastructure, while the frigid weather disrupted transport and delayed LNG tankers at Qingdao.

Big industrial users are first in line to have electricity supplies cut, followed by commercial buildings, in order to keep supply safe for residential consumers.

Meanwhile in Japan, its utilities have asked consumers to conserve electricity, and the government has ordered independent producers to boost output to maximum capacity.

Tohoku Electric Power Co. bought several cargoes of low-sulfur fuel oil for oil-fired power plants that are utilized only when gas-fed facilities have been maximized. Japan’s Ministry of Economy, Trade and Industry has begun speaking to refiners and urged them to help supply local utilities with LSFO supplies.

Wrap Up Warm

Earlier this week, the French grid operator issued a red alert for high power demand and appealed to households to put on a jumper rather than turn the heating up. Electricite de France SA advised customers to delay doing their laundry while power demand was high.

Parts of northeastern Sweden got the biggest snow dump since 2012, with 60 centimeters in just one day, according to the nation’s Meteorological and Hydrological Institute. The storm overwhelmed grids and has left many thousands of customers without power this week.

EON SE is paying for hotel rooms for Swedish customers as it struggles to restore power supplies that have been down since Jan. 11. Vattenfall AB, the Nordic region’s biggest utility, hired a helicopter to clear snow and ice from power lines, using a long pole to shake snow off cables or a grip claw to lift trees from the line.

In Spain, the government is considering ways to intervene in the electricity market when there are sharp price increases, as happened when demand surged during the cold spell that blanketed Madrid in a rare snowfall. Some consumer bills in the regulated market are linked to wholesale prices that are at the highest in a decade.

With natural gas shortages, power plants in Iran are burning low-grade fuel oils that create toxic smog, or switching off entirely, triggering blackouts.

Pakistan is facing a gas shortage, too, despite running its two LNG terminals at full capacity in January. The Asian nation has cut gas supplies to industries and limited flows to compressed natural gas stations to a few days a week as residential demand more than doubled compared to the summer and was higher than in previous winters.

How cold the rest of the winter gets is likely to be the key driver for whether higher energy prices will be sustained.

Even if temperatures ease, the impact of tighter LNG supplies is likely to be felt into the summer and to feed into other markets. As north Asia, the biggest consumer of LNG, restocks supplies that demand will support price benchmarks throughout 2021. What was expected to be a finely balanced summer just a month ago, is now looking increasingly tight, according to Wood Mackenzie Ltd.

(Updates with EON comment in fifteenth paragraph.)

 

[Tomasz + 1,608]

 

Quote

Gazprom's share in the European gas market in 2020 was around 33%, said President of Gazprom Export, Elena Burmistrova, during the Gaidar Forum. At the end of the year, the prices in our contracts were slightly lower than the spot quotes from European hubs, which further stimulated our exports, ”said Burmistrova. “Since the third quarter, our exports have reached, and in some cases exceeded, pre-crisis indicators. We successfully fulfilled all obligations towards importers and maintained our market share. In 2020, Gazprom in total delivered approximately 175 billion cubic meters to Europe and Turkey. Gas, which in the difficult market conditions is a reliable result - said Mayistrova. In her opinion, the instability of global gas markets has revealed the strengths of Gazprom's classic long-term contracts. Prices are more stable and predictable for them as the company employs various forms of indexing. When connected to hubs, contracts with long delivery times are used, which are less susceptible to temporary market fluctuations. Gazprom's share in the European gas market in 2019 was 36%.

Quote

 

Rystad Energy, an independent energy research and consultancy firm, analyzed the global gas market last year and presented a forecast for the development of the industry until 2040. According to Rystad Energy, global natural gas production fell by 3.5% in 2020 compared to the previous year - up to 3.918 billion cubic meters. m. The reason for the decline in production is the coronavirus pandemic.
The coronavirus pandemic has caused a decline in demand and a reduction in gas production in North America. In this region, production fell by 47 billion cubic meters last year. m compared to 2019, amounting to 1.103 billion cubic meters. m.
Unlike the oil market, the decline in gas demand last year was not a landslide - only 2.5% compared to 2019. In 2020, global gas consumption dropped to 3.840 billion cubic meters. m.
Demand in Asia remained high, but in Europe it fell by 7% or 40 billion cubic meters. m. In Africa, gas consumption was 26 billion cubic meters. m.
Along with the construction and commissioning of new installations, LNG production capacity in the world increased by 5%, reaching 464 million tonnes / year. The total capacity of LNG plants in the United States increased to 71 million tonnes / year in 2020 - 42% more than in the previous year.
Global LNG trade grew by 3% last year, reaching 363 million tonnes. Despite the coronavirus pandemic, LNG consumption in Asia increased by 4% year-on-year, fueled by rising demand from China. Imports to Europe remained high in the first half of 2020, but then fell significantly after that. The oversupply of gas amid falling demand during the coronavirus pandemic led to a collapse in prices on the European gas market. In May, natural gas prices fell below $ 35 / tonne in TTF, the main European hub (gas storage and distribution center). young. m. Gas in Europe has become so cheap that importers have refused shipments of American LNG despite penalties.
FORECAST UP TO 2040
Rystad Energy experts predict a 24% increase in global natural gas production by 2040. Compared to 2020 - to 4.857 billion cubic meters. m. Production will grow rapidly in North America, as well as in Russia and the Middle East.
World gas demand is expected to increase by 24% by 2040 and reach 4,867 billion cubic meters. m mainly due to increased consumption in Asian countries.
Rystad Energy experts believe that the policy of European countries aimed at stricter environmental requirements, as well as the use of renewable energy sources, will lead to a reduction in gas consumption in Europe from 2024. By 2040, gas consumption will decline by 43 billion cubic meters. m compared to 2020
Demand for gas in the United States may also fall due to the new environmental policy that the democrats who have come to power intend to pursue. Relevant declarations are expected to be made in the near future - after Biden's inauguration.
In 2020-2040, the global production capacity of LNG installations will almost double, by 91%, and will reach 886 million tons / year, but LNG production in the same period will only increase by 79% - to 672 million tons / year.
In this way, Rystad Energy anticipates the emergence of excess LNG production capacity in the world. It can be assumed that this will be due to the depletion of the resource base in some countries where production plants were built during the LNG boom. An example is Australia, which has the world's largest LNG production capacity - 88 million tonnes / year, but the raw material base, quality of reserves, and high production costs do not allow them to be fully used. Last year, the production of LNG in Australia amounted to 78 million tons.
Rystad Energy experts forecast an increase in the efficiency of LNG installations in North America to 203 million tons / year. The increase will be mainly due to the creation of new production plants in the USA. This forecast does not seem realistic due to the crisis in which the American shale industry is plunging.
Qatar will remain the largest producer and exporter of LNG in the Middle East. In Africa, Mozambique will become the largest producer of LNG, where gigantic deposits of natural gas were discovered, the resources of which reach 2 trillion cubic meters. m.
Asia will absorb almost all of the additional LNG that will be produced by 2040. In Asian countries, LNG is increasingly used to generate energy. China will become a major importer of LNG, but other countries - India, Pakistan, Bangladesh and Thailand - will also increase their use of this type of energy. It is predicted that LNG imports to European countries will decrease due to gas supplies via pipelines.
Rystad Energy predicts that in 2040, the demand for imported LNG will reach 736 million tons - 64 million tons more than expected production.

Rystad Energy clearly underestimates Russia's role in the global LNG market. In 2020, LNG production in Russia exceeded 30 million tonnes despite the energy market turmoil caused by the coronavirus pandemic. The main LNG production is concentrated in two complexes: Yamal LNG and Prigorodnoje in the south of Sakhalin, with design capacities of 16.5 million t / y and 9.6 ml t / y, respectively. Both plants are currently producing more than their planned capacity. Moreover, in the first quarter of this year. It is planned to launch an additional line at the Yamal LNG Installation with a capacity of 940,000 tonnes. Tonnes / year, using Russian Arctic Cascade gas liquefaction technology. Novatek, which successfully implemented the Yamal LNG project, started the construction of a second power plant with a capacity of 19.8 million tons per year on the Gydan Peninsula as part of the Arctic LNG-2 project. The company's plans provide for an increase in LNG production to 57 million tons / year by 2030. In 2019, information appeared that Novatek may revise its plans to increase LNG production to 70 million tons / year, but so far the revision has not taken place. Outside the Arctic region, Russia has the potential to increase LNG production in the Far East and in the northwest of the European part of the country. But a major role in increasing LNG production is assigned to the Arctic. Russia's energy strategy until 2035, approved by the government in June 2020, provides for an increase in the country's LNG production to 46-65 million tonnes / year in 2024 and to 80-140 million tonnes / year in 2035.

 

[Tomasz + 1,608]

Quote

 

Gazprom supplies to non-CIS countries from January 1 to 15 amounted to 9.1 billion cubic meters of gas, which is 41.5% more than in the same period last year, while, in particular, Germany increased gas purchases by 32.1 %, Italy - by 139.7%, Turkey - by 8.7%, Austria - by 11.7%, the company said.

"Gazprom supplies to non-CIS countries - 9.1 billion cubic meters of gas. This is 41.5% (2.7 billion cubic meters) more than January 1-15, 2020, and the second largest figure in the entire the history of the company's export deliveries, "the message says.

"The purchase of gas is increased, in particular, by such large consumers of Russian gas as Germany (by 32.1%), Italy (by 139.7%), Turkey (by 8.7%), Austria (by 11.7%) , France (51.6%), the Netherlands (21.2%), Poland (62.6%) and Hungary (298.4%), "the company adds.

Gazprom's exports to non-CIS countries in 2020 decreased by about 10%, to 179.3 billion cubic meters of gas. At the same time, last year's result is in the top five in the history of the company. In 2020, nine European countries increased their gas purchases from Gazprom compared to 2019, including Turkey, Greece, Belgium and Denmark.

EMAND ON THE DOMESTIC MARKET

Demand for Gazprom's gas from the gas transmission system in the domestic market from January 1 to 15 exceeded the figure for the same period in 2020 by 14.7%, the company said.

"The demand for the company's gas from the gas transmission system in the domestic market (from January 1 to January 15 compared to the same period last year - ed.) Is 14.7% higher (2.1 billion cubic meters)," the statement said.

GAS PRODUCTION

Gas production of "Gazprom" from January 1 to 15 amounted to 22.6 billion cubic meters - 4.3% more than in the same period in 2020, the company said.

 

 

[Tom Nolan + 2,443]

Thanks Tomaz!  Those were some great posts.

[Tom Nolan + 2,443]

Reuters

Tellurian aims for Louisiana LNG construction start this summer

Scott DiSavino

Fri, January 15, 2021, 12:24 AM·2 min read

https://finance.yahoo.com/news/tellurian-aims-louisiana-lng-construction-062428958.html

(Reuters) - The co-founder of U.S. LNG developer Tellurian said Thursday that the company is targeting this summer to begin construction of its $16.8 billion Driftwood LNG export project in Louisiana as demand for the super-cooled fuel surges worldwide.

"I hope that we will be in construction this summer," said Charif Souki, co-founder and executive chairman of Tellurian. "There is a strong need for additional liquefaction capacity and we're probably the project that is the closest to starting construction."

Demand for liquefied natural gas has soared in recent years as countries like China and India shift power generation away from dirtier coal-fired plants. In recent weeks, both prices for the fuel and shipping fees have soared due to cold weather in Asia and bottlenecked shipments at the Panama Canal.

"The level of (customer) interest has increased pretty dramatically over the past month," Souki said.

Over the past two years, numerous projects slated for groundbreaking in North America, including Driftwood, were delayed because customers were unwilling to sign long-term deals needed to finance the projects as natural gas prices slumped.

Coronavirus demand destruction caused gas prices in Europe and Asia to plunge to record lows below $2 per million British thermal units (mmBtu), while U.S. gas prices fell to their lowest in 24 years last year.

"The system is stressed," Souki said, adding that global LNG demand is on track to increase by around 200 million tonnes over the next seven years. In 2020, global LNG demand hit a record high of 360 million tonnes.

The first phase of Driftwood is slated for operation in 2025, and will produce about 16.5 million tonnes per annum of LNG, equivalent to about 2.2 billion cubic feet per day of natural gas. One billion cubic feet of gas is enough to supply about five million homes for a day.

(Reporting by Scott DiSavino; Editing by Christopher Cushing)

[footeab@yahoo.com + 2,190]

On 1/5/2021 at 6:05 AM, NickW said:

The Big 3 auto manufacturers got an $80 billion bailout in 2009-10. Did you object to that with the same vigour? 

Hell Yes.  Go bankrupt.  Not to mention there were so many absurd strings, now the US Government effectively OWNS 1/3 of GM.  Sorry, no that is NOT free market capitalism. 

[Tom Nolan + 2,443]

Monday January 18th (MLK Holiday in U.S.)

Natural gas prices fall hard.

Natural gas futures tumbled to $2.6/MMBtu, from last week's one-month high of $2.75/MMBtu, amid oversupply concerns. China's economic data showed the country's natural gas production hit a record high in 2020. However, forecasts for colder weather and higher heating demand during the last week of January, as well as record demand for liquefied natural gas exports, should provide some support in the coming days. Last week, the EIA inventory report showed a higher-than-expected decrease in natural gas supplies.

https://tradingeconomics.com/commodity/natural-gas

[Coffeeguyzz + 454]

The announcement today from Commonwealth LNG  that they are essentially offering an 'open season' for bids on pricing and terms for product is intriguing on so many levels.

Commonwealth seems to be asking potential buyers around the world "How much LNG do you want, how much are you willing to pay us for it, and upon what terms would you like the product to be handled (delivery particulars, etc.).

Of the many specifics that are involved, rhe supply backing from huge trader Gunvor - already committed to buying 3 mtpa of tbe project's 8.4 mtpa capacity - should allay concerns from prospective customers about supply reliability.

In addition, Commonwealth is receptive to pricing based upon indices other than Henry Hub. Not only could this potentially help Appalachian Basin operators, it could possibly lower the customer's cost.

In the construction phase of this project, Commonwewlth is actually planning on shipping in the storage tanks (6) which will be fabricated offsite.

This is an industry first, I believe.

 

All in all, this is a novel approach to the already dynamic LNG universe. Results could be instructive as to future directions companies will take.

[Tom Nolan + 2,443]

3 hours ago, Coffeeguyzz said:

The announcement today from Commonwealth LNG

Reuters January 18, 2021

Commonwealth LNG, Gunvor aim to accelerate stalled LNG plant via fuel tenders

https://www.reuters.com/article/global-lng-commonwealth/commonwealth-lng-gunvor-aim-to-accelerate-stalled-lng-plant-via-fuel-tenders-idUSL1N2JT1M2

HOUSTON, Jan 18 (Reuters) - Commonwealth LNG on Monday launched a liquefied natural gas (LNG) tender for its proposed Louisiana liquefaction plant, hoping to accelerate an investment decision on the project by reducing its uncertainty for potential customers and investors.

The plant is among a dozen stalled last year as the drop in energy demand exacerbated a reluctance to sign on to projects without a certainty of being completed. Bankers have said they expect no new LNG projects to go ahead this year.

Commonwealth LNG proposed an 8.4 million tons per annum (mtpa) plant on the U.S. Gulf Coast. Financial approval of the project has been delayed more than a year, to the first quarter of 2022, with initial output scheduled for mid-2025.

Energy trader Gunvor Group will guarantee LNG supplies for prospective customers and provide shipping as needed, the companies said. Gunvor previously agreed to acquire 3 mtpa of the project’s future supply.

The tender applies a contracting technique akin to energy pipelines that employ “open season” bidding to solicit shippers, said Jason Feer, head of business intelligence at Poten & Partners, a shipbroking and LNG advisory firm managing the tender.

Commonwealth is asking potential buyers to submit their offers for LNG pricing, volume and contract duration, subject to its approval. Bids are solicited through April 2 and, if accepted, contracts will be signed by June, Commonwealth said.

The offer is “a low-risk solution for buyers to address their long-term needs while allowing Commonwealth to advance our project expeditiously,” said Chief Executive Paul Varello.

“It is too early to say whether this becomes a model for LNG project development, said Poten’s Feer. “It has benefits for the LNG company and for off takers. They won’t have to wait two years to find out whether a project will get enough contract” to move ahead.

Poten & Partners, the shipbrokering and LNG advisory firm, is managing the tender. (Reporting by Gary McWilliams; editing by Jonathan Oatis)

 

[Tom Nolan + 2,443]

Why Natural Gas Prices Are Set To Go Higher

    

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

By Tsvetana Paraskova - Jan 18, 2021, 5:00 PM CST

https://oilprice.com/Energy/Natural-Gas/Why-Natural-Gas-Prices-Are-Set-To-Go-Higher.html

Winter temperatures below seasonal norms in the northern hemisphere have created a rally in natural gas prices from Asia to Europe.    The spot liquefied natural gas (LNG) prices in north Asia jumped to record highs last week, while the key price marker in Europe, the Dutch Title Transfer Facility (TTF), rallied to the highest in more than two years. 

The natural gas markets at the start of 2021 look completely different from the beginning of last year, when milder weather and the pandemic hit to demand had dragged natural gas prices down to historic lows. 

This winter season, a rebound in Asian natural gas demand, supply issues at major LNG exporters, logistics issues at the Panama Channel, soaring tanker rates, and last but not least, the cold snap from Madrid to Tokyo, are pushing gas prices higher. 

Even when temperatures return to seasonal norms in coming weeks and the Polar Vortex-induced cold spells in Europe end, natural gas prices will continue to be supported through the spring and summer, as buyers would look to restock, analysts say. 

The record-high Asian LNG prices may not last for long, but these generally higher prices than last year’s lows are set to support the prices in Europe, which is likely to receive fewer LNG cargoes this winter considering that spot prices in Asia are much, much higher. 

In just two months, the global natural gas market turned from an oversupplied or a finely balanced market at best, into a tightening market, leading to hikes in prices from Asia to Europe. The much higher prices in Asia and Europe than the U.S. benchmark Henry Hub will incentivize U.S. LNG spot sales to those markets and the maximizing of U.S. liquefaction capacity, according to analysts. 

Related: UAE Oil Major Turns To Hydrogen

Spot LNG prices in Asia have staged an impressive rally over the past two months and have now soared 18 times from April 2020 lows—and the surge is obliterating even the recent rally in Bitcoin prices.   

A perfect storm of unusually cold winter in north Asia, outages at major LNG exporters, and logistical and shipping constraints drove the price of Asia’s LNG benchmark, the Japan-Korea Marker (JKM), to the highest on record last week, soaring over $30 per million British thermal units (MMBtu) for the first time. 

In Spain, home of one of Europe’s biggest terminals, LNG prices also surged amid an unusual cold snap in the country, which brought a rare snowfall in Madrid.

The lower-than-normal temperatures in many parts of Europe are driving higher gas withdrawals than usual, setting the stage for higher-than-expected demand through the spring and summer for replenishing stocks. 

Goldman Sachs expects a “perfect bullish storm” for natural gas prices this year, and raised its forecasts for the prices at the European benchmark, the Dutch Title Transfer Facility (TTF), to $8.30/MMBtu for the rest of this winter, from $6.65/MMBtu expected earlier. Goldman also lifted its spot Asia LNG price outlook to $14.30/MMBtu from $12.65/MMBtu. 

“The current cold spell in the northern hemisphere is paving the way for a tighter global gas market throughout the year,” Wood Mackenzie said last week in its 2021 gas market outlook. 

After the impressive surge, Asian LNG spot prices will drop in the second quarter, but the current cold spell is setting the stage for an increasingly tight summer gas market, compared to what looked like a finely balanced summer just a month ago, WoodMac says. 

Gas storage levels in Europe are already more than 15 billion cubic meters lower than last year and are now close to the past five-year average. Forecasts of higher coal and European carbon prices, also partially driven by the current cold spell, “provide headroom for higher European summer gas demand,” the consultancy noted. 

“Global prices reached record lows in 2020, with TTF averaging US$3.2/mmbtu and Asian LNG spot averaging US$3.9/mmbtu. 2021 will show a stark difference, we anticipate TTF averaging US$5.6/mmbtu and Asian LNG spot averaging US$7.6/mmbtu,” said Wood Mackenzie vice president Massimo Di Odoardo. 

The surge in Asian spot LNG prices is good news for U.S. exporters. 

The wide spread between Asia’s LNG prices and Henry Hub suggests there is “very little chance” of seeing U.S. LNG cargo cancellations—as in the summer of 2020—anytime soon, Warren Patterson, ING’s Head of Commodities Strategy, said in the bank’s Energy Outlook 2021. 

“Regional gas markets will be better supported over 2021, and it looks increasingly unlikely that we will see a repeat of cargo cancellations this year,” Patterson added.

By Tsvetana Paraskova for Oilprice.com 

[Tom Nolan + 2,443]

Grand Solar Minimum

Tom Nolan here:  I want to mention that I am long Natural Gas this year.   One factor is that we are in the beginning of the Grand Solar Minimum.  In general terms we will see a cooler earth.  Growing seasons will change in different regions.

I first became aware of the Solar Minimum from Ice Age Farmer.  If anyone keeps up with food commodities, or general events, this is a good source of news.   https://www.youtube.com/c/IceAgeFarmer/featured

WEBSITE - https://www.iceagefarmer.com/

EXCERPTS

Our sun is reaching the end of it's normal 11 year cycle and is now approaching a period of minimum solar activity. This one's being dubbed the Grand Solar Minimum. Some say it's the real cause of climate change and that it's going to wreak havoc with our weather systems for years to come, possibly even tipping us into a mini ice age.

16 minutes

Edited January 19, 2021 by Tom Nolan

[Tom Nolan + 2,443]

Reuters Jan 18th

Analysis: Oil majors beat traders, gas rivals to cash in on LNG price spike

https://finance.yahoo.com/news/analysis-oil-majors-beat-traders-230933524.html

 

FILE PHOTO: A LNG tanker is tugged towards a thermal power station in Futtsu

By Jessica Jaganathan, Benjamin Mallet and Dmitry Zhdannikov

SINGAPORE/PARIS/LONDON (Reuters) - Global energy majors including Royal Dutch Shell and Total are expected to benefit most from January's gas price spike, beating rival trading houses and non-integrated producers thanks to their access to multiple sources of the fuel.

Asian liquefied natural gas (LNG) prices have rocketed to record highs in January due to low stocks, a cold winter, global production outages and shipping delays. They have outpaced prices in much of Europe and the United States, where gas is abundant, creating an arbitrage opportunity for sellers.

Several companies and traders have rushed to meet the Asian demand, but have struggled to find volumes for quick delivery.

However, majors such as Shell and Total, with access to multiple sources of gas, have been able to re-route U.S., Nigerian and Qatari gas tankers previously destined for Europe to Asian markets.

"Some of our long-term contracts include possibilities for diversions. We are 'reshuffling' cargoes that are flexible to direct them to premium markets," said an executive with one major, speaking on condition of anonymity.

"On the European market, we can still buy pipe gas and therefore substitute it for a commitment to supply LNG. Once your delivery commitments in Europe are covered in pipe gas, the cargoes that were planned for this area can be repositioned where there is demand," he said.

Shell declined to comment. Total had no immediate comment.

The regional difference in price, excluding shipping and other costs, is currently huge.

U.S. gas futures for February at the Henry Hub benchmark currently trade at around $2.60 per million British thermal units (mmBtu). In Europe, prices at the Dutch TTF hub are around $10 per mmBtu, while in Asia they are just under $30.

"Traders don't have such flexibility but majors do, especially those with access to Qatari gas," said a source familiar with Qatar's state firm QP.

Qatar, Australia, Russia and the United States are the biggest producers of LNG, accounting for 70% globally.

RBC Capital Markets says Equinor, Shell and Total have the biggest exposure among majors to gas prices.

"We see Shell as advantaged by its exposure to the strength of LNG prices, although Total should also be a beneficiary," Barclays said in a note.

Data intelligence firm Kpler’s shiptracking data showed Shell and Total diverting cargoes with Nigerian and U.S. LNG to Asia, with several other cargoes also changing destination towards Asia, though charterers were not clear.

Peter McNally from consultants Third Bridge said U.S. firms Cheniere and Freeport should also benefit as they had volumes available for Asia.

PANIC BUYING

LNG has emerged as a flexible and often cheaper alternative to pipeline gas over the past decades, but it still represents only about 10% of the total natural gas traded globally.

The lion's share of LNG is sold based on long-term oil-indexed deals, but around a tenth of the market is spot, with flexible prices.

The current price spike affects mostly spot LNG, while long-term deals are currently being priced at around 11-13% of the Brent crude price, or around $6-$7 per mmBtu.

"Spot LNG in Asia is now like toilet paper rolls during the pandemic - you look at the empty shelves and you grab the last one at any price," said a second executive with another major trading desk.

Surging LNG prices are giving Qatar an incentive to quickly expand its projects and will support many struggling LNG plants in the United States.

But the spike could also undermine the formation of a flexible spot LNG market as many buyers may prefer to stick to long-term oil-indexed deals.

"Exposing more to the spot this winter has been a terrible miscalculation so far. In the coming weeks and months, it will bring the value of long-term contracts back to light," said the first executive.

(Reporting by Jessica Jaganathan; Benjamin Mallet; Nina Chestney; Scott DiSavino, Dmitry Zhdannikov. Writing by Dmitry Zhdannikov. Editing by Mark Potter)

Edited January 19, 2021 by Tom Nolan