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A Global LNG Crisis

Friday, August 9, 2019

1. LNG prices plunge to 3-year low

- Spot prices of LNG for September delivery in Northeast Asia plunged to just $4.10/MMBtu, the lowest price since April 2016.

- The supply glut has helped drag down prices, while demand has also softened. Reuters reports that at least two cargoes actually sold for less than $4/MMBtu recently. Indian Oil Corp. bought one shipment from Trafigura for $3.69/MMBtu, and CNOOC bought one from Vitol for $3.90/MMBtu.

- The issue is a global one, with natural gas prices in Europe and the U.S. trading at low levels, leaving few areas for producers to find higher prices. Traders are even beginning to look at booking ships for LNG storage, with the plan to offload cargoes in the winter when demand is higher.

- In Japan, average contract prices are double the spot price, and utilities are beginning to grow restless, looking to wiggle out of contract commitments and renegotiate prices. “Given the gas and power markets liberalization and intensifying domestic competition in Japan, it is very important for Japanese utilities to achieve competitive LNG prices so price review negotiations are becoming more intense,” Thanasis Kofinakos, head of gas and LNG consulting, Asia Pacific, at Wood Mackenzie, told Reuters.

2. Energy expenditures per dollar of GDP highest in energy-producing states

- In 2017, every U.S. state saw an increase in total energy expenditures and total…






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