LNG market grows, more spot trade in 2020
The amount of LNG imported grew fractionally in 2020 from 354.7mn metric tons to 356.1mn mt, despite the shut-ins of production and the falling demand for energy, according to a new report by the France-based International Group of LNG Importers (GIIGNL) published April 27.
The year was largely scarred by COVID-19. As industrial and heating demand fell worldwide, some US LNG plants closed as long-term capacity holders would have lost money on liquefaction and export.
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The report also found that more deliveries than ever were made within three months of the transaction date, accounting for 35% of the total, compared with 2019's 27%. This might have been the result of traders scrabbling for buyers at almost any price. Asia accounted for much of the demand, with Japan taking the most, with over a fifth of the total (74.4mn mt) despite a year on year drop in demand.
China saw the greatest growth in terms of imported volumes (+7.2,mn mt), which is below its 2019 growth of 14%. The main surge of LNG imports took place during the second quarter of 2020, when LNG imports were favoured over pipeline imports, as a consequence of lower spot LNG prices. China buys pipeline gas from central Asia and Myanmar and was reportedly invoking force majeure to escape taking central Asian gas as well as LNG.
Almost all exporting countries experienced decreases in their exports, with the greatest declines in Trinidad & Tobago and Malaysia (-2.4mn metric tons each), followed by Egypt (-2.1mn mt). The Atlantic Basin is the only region which experienced growth in 2020 (+3.2mn mt), although even there not all the facilities were running at capacity as there was no profit to be made on some sales; while the Pacific Basin and the Middle East recorded declines of 0.5mn mt and 1.3mn mt respectively.
Australia and Qatar led the pack, with 77.8mn mt and 77.1mn mt respectively. This is the first time that Australia has taken over Qatar as leading exporter on an annual basis, the report said.
Regional arbitrage opportunities rose year-on-year, especially from Q4 2020. Re-exports increased to 2.6mn mt, from 1.6mn mt in 2019. Singapore performed the most reloading operations with 1.1mn mt. China being the main destination for these. Europe followed with 1.1mn mt, of which France accounted for 0.5mn mt, not Zeebrugge which has built a tank separate from the national gas grid that is specifically for Russian LNG reloads.
NGW has reported that other production decreases were not market related: Norway stopped producing LNG in late September following a fire at the Hammerfest LNG plant; it is not now due back on line for another year. And the Shell-operated Prelude floating LNG project off Australia got off to an erratic start.
The report, which contains a wealth of contract and other LNG-related trading data, may be downloaded here.