A frigid winter in Asia and a shortage of LNG carriers are sending spot charter rates to never-before-seen levels
BP chartered Nigeria LNG’s 175,000-m3 LNG Abalamabie for a Bonny Island loading in early February at around US$350,000/day, according to a report in Argus.
Independent commodities trader Trafigura has released a requirement for an early February US loading at around the same rate, said Argus. This would be a record high.
Atlantic spot charters rates rose from US$99,000/day on 5 January to US$322,000/day on 8 January, with Pacific spot charter rates reaching US$221,750/day, according to Sark Commodities, a joint venture between Kpler and Powernext.
After prices cratered in Q1 2020 driven by the lockdowns imposed by Covid-19, LNG prices to transport to the major Asia importers – Japan, China and South Korea – have surged, with the regional price benchmark reaching US$28.221 per million BTU on 11 January, according to S&P Global Platts.
Traders are scrambling to find LNG carriers on the spot market to load cargoes in the US Gulf for Asian customers.
As a result, US LNG exporters have enjoyed two consecutive months of record-setting exports, hitting an average of 9.4Bn ft3 per day (bcfd) in November and 9.8 bcfd in December, according to the US Energy Information Administration (EIA). Since June 2020, more than half of US LNG cargoes have been exported to Asia.
Other Asian countries have also begun to receive US LNG exports. On 10 January, US LNG producer Cheniere Energy reported its first cargo was received in Taiwan under a 25-year agreement with state-owned CPC Corp. The deal, signed in 2018, will see about 30 cargoes sent to CPC annually. The first cargo was shipped from Cheniere’s export facility in Corpus Christi, Texas.
Besides the cold snap in Asia, US LNG exports were boosted by a decrease in supplies of LNG due to unplanned outages at LNG export facilities in Australia, Malaysia, Qatar, Norway, Nigeria, and Trinidad and Tobago. Reduced LNG supply led to higher international natural gas and LNG prices in Asia and Europe, attracting higher volumes of flexible LNG supplies from the US, according to the EIA.
It is a dramatic turnaround for the LNG market and US LNG exports, following the decline in natural gas and LNG prices in April and July, which saw prices hit historic lows in Asia and Europe – and the cancellation of some 70 US LNG cargoes in June and July and more than 40 in August.
The EIA expects US LNG export levels to remain at record levels during the winter season, forecasting exports will average 9.5 bcfd in Q1 2021, and 8.5 bcfd on an annual basis in 2021, up 30% from 2020.
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